Chief Experience Officer at Sectigo (@SectigoHQ). Long time blogger about online security, branding, marketing, and technology.
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Articles by Tim Callen
Saudi Growth Rebounds in Third Quarter, But Uncertainty Remains High
The preliminary or “flash” estimate of gross domestic product for the third quarter of 2026 shows that the Saudi economy returned to growth after contracting in the first two quarters of the year. Real GDP grew by 1.3% relative to the second quarter (although it still contracted by 3.8% compared to the third quarter of 2025). The growth rebound was driven by a recovery in oil production. Real oil GDP grew by 5.7% quarter on quarter compared to a 21.6% contraction in the second quarter.
Putting Recent Saudi Budget Data Under the Microscope
The Saudi Ministry of Finance has published Saudi Arabia’s budget performance report for the third quarter of 2026. The report shows that the government budget deficit increased to 84 billion riyals ($22 billion) in the third quarter from 34 billion riyals ($9 billion) in the second quarter. The cumulative deficit for the first three quarters of 2026 is now 244 billion riyals ($65 billion), already nearly 50% higher than the full year deficit projected in the 2026 budget.
Vision 2030 and the Limits of Economic Resilience
On February 9, Reuters reported that Saudi Arabia’s Public Investment Fund was preparing to announce a major recalibration of its investment strategy for 2026-30. The revised strategy was expected to scale back some of these initiatives while prioritizing domestic investment sectors.
The Domestic Considerations of Gulf Sovereign Wealth Funds
Gulf sovereign wealth funds are expected to invest $136 billion by the end of 2026, with Abu Dhabi-based Mubadala having served as the leading regional sovereign investor so far in 2026. For its part, L’imad, Abu Dhabi’s newest sovereign wealth fund, is planning to invest billions in port-related infrastructure outside of the Strait of Hormuz.
Evaluating the PIF’s Financial Performance and New Strategic Direction
The Public Investment Fund is at the center of efforts to grow and diversify the Saudi economy. Since the inception of the first PIF program for 2018-20, the PIF has significantly increased its footprint in the Saudi economy and has become a major investor in global financial markets. It has more than 220 companies in its portfolio and estimates that it contributed 11% of Saudi Arabia’s non-oil gross domestic product in 2025.
Saudi Current Account Back in Deficit in the Second Quarter
The Saudi current account balance moved back into a deficit of $9.5 billion in the second quarter of 2026. The first quarter had seen a surplus for the first time in nearly two years as oil revenue jumped (higher prices offsetting lower export volumes) and imports fell (as did non-oil exports) with the closure of the Strait of Hormuz. In the second quarter, oil revenue fell by 12% and non-oil exports and imports both fell further.
Saudi Fiscal Deficit To Be Larger Than Budgeted in 2026
The Ministry of Finance has published the 2027 “Pre-Budget Statement” and the 2026 “Mid-Year Economic and Fiscal Performance Report.” The documents provide updates on economic and fiscal developments in 2026 and projections and key policy goals for 2027-29. The ministry now expects a government budget deficit of 245 billion riyals ($65 billion; 4.9% of gross domestic product) in 2026 compared to a budget forecast of a deficit of 165 billion riyals ($44 billion; 3.3% of GDP).
Saudi Labor Market Holds Firm in Face of Regional Conflict
The unemployment rate of Saudi nationals was broadly unchanged at 6.5% in the second quarter of 2026. The unemployment rate of Saudi men ticked down to 4.8% (from 4.9% in the first quarter), while the unemployment rate of Saudi women increased to 9.6% (from 9%). The Saudi employment-to-population ratio and labor force participation rate both edged lower but not significantly so. Job creation did slow but remained positive.
Saudi Economic Recovery Delayed by New Threats
Not long ago, the Saudi economy appeared to be weathering the Iran-U.S.-Israel war relatively well. The East-West oil pipeline had allowed oil exports to continue despite the closure of the Strait of Hormuz, and higher oil prices had compensated for reduced export volumes. In July, oil production had increased to over 8 million barrels per day, its highest level since February.
Kuwait Gets Some Good News Amid Tough Times
Kuwait has seen difficult days before, but these are trying times. The small Gulf country has been on the front lines of Iran’s retaliatory attacks targeting critical and civilian infrastructure, such as the international airport and energy facilities. Disrupted maritime traffic through the Strait of Hormuz has significantly restricted Kuwaiti energy exports.
Pension Reform Joins the Gulf’s Talent Retention Toolkit
The Gulf states want their highly skilled expatriates to stay, but the recent war with Iran has been a reminder of how easily they can leave. The war has tested perceptions of stability for expatriates in the Gulf. In the weeks that followed the February 28 U.S.-Israeli bombing of Iran, the United Kingdom foreign secretary reported that more than 100,000 British nationals departed the Gulf, including expatriates and tourists.
The Trump Presidency, Iran War, and U.S.-Gulf Economic Relationship
Since President Donald J. Trump returned to office in January 2025, he has focused on securing large trade and investment commitments from foreign companies and governments, including those in the Gulf. Following the president’s visit to the Gulf in May 2025, a White House fact sheet claimed that commitments made by Qatar, Saudi Arabia, and the United Arab Emirates totaled $3.4 billion.
Data Confirms a Large Economic Contraction in Saudi Arabia in the Second Quarter
The General Authority for Statistics has published the “flash” (or preliminary) estimates for economic growth in Saudi Arabia in the second quarter of 2026. Real gross domestic product contracted by 4.9% relative to the first quarter of the year. This was largely due to the oil sector, with real oil GDP falling by 21.5% as oil production was severely affected by the closure of the Strait of Hormuz. Real non-oil GDP also contracted, declining by 0.4% relative to the first quarter.
Have Saudi Labor Market Reforms Run Their Course?
Saudi Arabia has implemented wide ranging labor market reforms over the past decade. These reforms have encouraged more Saudis to work, particularly in the private sector; increased the incentives for employers to hire Saudi workers; and enabled Saudi women to engage more actively in the labor market. The reforms have yielded positive results.
Saudi Arabia Reflects on Underwhelming World Cup
Following Saudi Arabia’s early exit from the World Cup, the kingdom’s soccer authorities may enter a period of introspection considering challenges that have cast a shadow over the post-2023 landscape of Saudi soccer. Players from the Saudi national team ahead of the match against Cape Verde at Houston Stadium, Houston, Texas, June 26.
Saudi Arabia Weathers the Iran War Thanks to Investments in “Economic Resiliency”
For a country that has been directly in the firing line of the U.S.-Israeli war with Iran, the Saudi economy has held up quite well. Yes, economic growth has slowed, but inflation has remained contained, modest employment growth has continued, and the unemployment rate has declined. The relatively limited economic impact can be attributed to several key pillars of the country’s long-term oil and economic policy strategy.
After the Hormuz Crisis, No Return to the Status Quo
The preliminary agreement reached by the United States and Iran may have brought an end to hostilities and tentatively reopened the Strait of Hormuz, but few participants at the Arab Gulf States Institute’s June 8 Petro Diplomacy conference believed any such agreement would return the region to business as usual. Instead, the consensus was that the conflict had fundamentally changed how governments, companies, and investors view energy security.
Lingering Vulnerabilities: Bahrain’s Political Economy and the Iran War
The 14-point memorandum of understanding signed between the United States and Iran called for an immediate halt to fighting and a 60-day period to negotiate a final settlement to end the war. Although the deal remains in the early stages and will be tested in the weeks ahead, any sustained progress toward ending hostilities and reopening the Strait of Hormuz would offer at least partial relief to hard-hit Gulf states, such as Bahrain.
Qatar’s National Team Mirrors the State
When Qatar’s Mahmoud Abunada was named man of the match in Santa Clara, the award went to a goalkeeper who had conceded a first-half penalty before keeping his side alive with a string of saves. The performance June 13 secured Qatar a 1-1 draw with Switzerland and its first point in FIFA World Cup history, erasing the memory of 2022, when Qatar became the first host country eliminated without a single point.
Saudi Economic Outlook Positive If U.S.-Iran Deal Holds
The Saudi economy has been negatively affected by the U.S. and Israeli conflict with Iran, although to a lesser degree than some of its neighbors. The negative growth impact has mainly come through the loss of oil exports through the Strait of Hormuz, which have only partially been offset by increased flows through Saudi Arabia’s East-West pipeline. A drop in business confidence has also curtailed private sector investment.
Hormuz Crisis to Redraw Gulf Energy Investment Landscape
Iran’s closure of the Strait of Hormuz since the start of U.S. and Israeli strikes February 28 has disrupted oil and gas flows from the Gulf region with lower export revenue expected to result in lower regional energy investment in 2026, the International Energy Agency wrote in a new report. The report, “World Energy Investment 2026,” released May 28, is the first comprehensive assessment of how the Middle East crisis is likely to shape investment flows in the region and globally.
Energy in Crisis: Markets and Geopolitics of Supply
The conflict that erupted in the Gulf February 28 – and the closure of the Strait of Hormuz that followed – has triggered what the International Energy Agency’s executive director, Fatih Birol, has said is the world’s worst energy crisis, although the full economic effects have yet to materialize. Never has the energy industry faced multiple challenges simultaneously and at this scale.
Sovereign Wealth in Wartime
Despite Iran’s closure of the Strait of Hormuz, capital from Gulf sovereign wealth funds keeps flowing. According to Global SWFdata, Saudi Arabia’s Public Investment Fund, the United Arab Emirates’ Mubadala, and Qatar Investment Authority together deployed close to $25 billion in fresh capital during the first quarter of 2026, despite active conflict over one-third of that period, a pace that would have pointed toward a record year under normal conditions.
The Impact of the Iran War on the Saudi Economy
The U.S.-Israeli war with Iran has led to slower economic growth and disrupted trade in Saudi Arabia, but to date inflation has been unaffected. A tugboat assists a cargo ship to dock at the Dammam Port in Dammam, Saudi Arabia, May 17. (REUTERS/Mohammed Benmansour) The impact that the U.S.-Israeli war with Iran is having on the Saudi economy is becoming clearer as more economic data is released by the statistical authority and other providers.
The PIF’s 2026-30 Strategy Emerges Amid Heightened Regional Tensions, Uncertainty
It is a challenging moment to be a Gulf economic policymaker. The Iran war that began on February 28 has clouded the region’s economic growth trajectory. Unprecedented energy market developments have injected uncertainty into the fiscal positions of regional governments, which remain closely linked to the oil and gas sector. At the same time, the deliverables associated with economic policymaking roles are more crucial than ever. Government-related planning, spending, and investments must continue.
Spending Surge Puts Saudi Budget in Large First Quarter Deficit
The Saudi budget deficit increased to 126 billion riyals ($34 billion) in the first quarter of 2026, the largest quarterly deficit ever recorded. Government spending surged by 20% (year over year) to 387 billion riyals ($103 billion), while revenue dipped due to lower oil revenue. The 20% spending increase was driven by goods and services (52% higher than in the first quarter of 2025), subsidies (170% higher), and investment projects (56% higher).
Gulf PMIs Raise Specter of Stagflation
A purchasing managers’ index is published by S&P Global for Kuwait, Qatar, Saudi Arabia (jointly with Riyadh Bank), and the United Arab Emirates. The PMI is a monthly business survey that asks senior management at companies in the non-oil sector about current and expected future business conditions. The PMI is a useful leading indicator of economic conditions. In March, PMIs across the Gulf region had fallen, reflecting the impact of the U.S.-Israeli war with Iran.
The Iran War and the Saudi Economy
Previously released data on oil production and business confidence had forewarned that a slowdown in Saudi economic growth was imminent. Saudi oil production fell to around 7 million barrels per day in March from 10.9 mb/d in February (OPEC data), as exports were curtailed by the closure of the Strait of Hormuz. The Riyadh Bank purchasing managers’ index, a monthly measure of business confidence, fell to its lowest level in March since the early days of the coronavirus pandemic.
The UAE Splits From OPEC
The decision by the United Arab Emirates to exit OPEC after nearly 60 years and step away from the OPEC+ alliance starting May 1 came as no surprise, as tensions have been building for some time. Still, the timing of the announcement on April 28 was significant, coming the day of a Gulf Cooperation Council summit in Jeddah meant to signal regional unity after Iranian attacks. It also came in the middle of the most serious energy supply disruption in recent history.
Reading Oil Market Signals in a Fog of War
The latest outlooks from the International Energy Agency, OPEC, and U.S. Energy Information Administration point to a market in which even the most closely watched institutions no longer agree on the direction of travel. Demand growth forecasts for 2026 now diverge by more than 1.5 million barrels per day. This divergence reflects more than differences in methodology; it is a direct consequence of a geopolitical shock that has both fractured supply chains and clouded visibility.
New Regional Corridors Emerge Amid Iran Conflict
On April 10, Saudi Arabia Railways announced the launch of five new logistics corridors in the freight sector – a recent addition amid a flurry of economic corridors that have emerged since the Iran conflict began February 28. The unprecedented obstructions to the Strait of Hormuz have laid bare the advantages of export route optionality, as Saudi Arabia has benefitted from, with its East-West pipeline that has kept crude oil flowing to global markets.
Iran War Hits Business Conditions in Saudi Arabia and the Gulf
A purchasing managers’ index is published by S&P Global for Kuwait, Qatar, Saudi Arabia (jointly with Riyadh Bank), and the United Arab Emirates. The PMI is a monthly business survey that asks senior management at companies in the non-oil sector about current and expected future business conditions. The survey includes questions about output, exports, capacity utilization, inventories, prices, and employment.
Saudi Equities Outperform Global Markets
As the U.S.-Israeli conflict with Iran moves into its second month, the Gulf continues to face drone and missile attacks, the destruction of infrastructure and property, the curtailment of oil and gas exports, and uncertainty about how and when the conflict will end. Through these challenges, however, the Saudi equity market has proven to be remarkably resilient.
A Silent Casualty of War: The Rising Risk of Ecocide in the Gulf
More than 2,500 missiles and drones have been launched across the region since the February 28 onset of the U.S.-Israeli conflict with Iran. The escalation has extended beyond military targets to include critical civilian infrastructure across both sides of the Gulf – targeting shipping lanes, oil and gas tankers, and water desalination facilities and raising concerns over potential strikes on civilian nuclear power plants.
Not All Oil Is Created Equal
The war with Iran has effectively closed the Strait of Hormuz through which around 20% of global oil supply previously transited. This curtailment of supply has seen oil (and gas) prices rocket higher despite releases from strategic reserves and efforts by some producers to position additional oil in storage outside of the region ahead of conflict. Oil prices, however, have not all been affected equally over the past month.
The Economic Impact of the Iran Conflict on the Gulf
The Iran conflict is negatively affecting economic growth in the Gulf region. Oil and gas production is being cut back because of the closure of the Strait of Hormuz. This in turn is having a knock-on effect on industries, such as refining and petrochemicals. Imports for domestic consumption and investment are being disrupted because of the inaccessibility of ports on the Gulf coast.
Araghchi Optimistic Regarding the Talks
Iranian Foreign Minister Abbas Araghchi, Omani mediators, and even several anonymous U.S. officials familiar with the latest round of negotiations in Oman have expressed optimism about the indirect talks between Iran and the United States, with technical discussions scheduled for next week. Nevertheless, Iran and the wider region remain under the shadow of war.
Demographics Mean That Job Creation Is Top of the Saudi Economic Policy Agenda
Saudi Arabia has a young population. Over one-half of Saudis (10.3 million people) are below the age of 25 and two-thirds of these (6.6 million) are younger than 15 years old. This pool of current and future young workers provides Saudi Arabia with the opportunity to reap a “demographic dividend” if demand for labor increases with the expanding labor supply. This opportunity, however, comes with risks.
Iran Signals Deterrence Paired With Diplomacy
As Iran prepares for the next round of negotiations with the United States, Iranian officials and media signaled calibrated deterrence against a threatened U.S. military strike paired with conditional openness to diplomacy. February 24: According to economic newspaper Donya-ye Eqtesad, Supreme National Security Council Secretary Ali Larijani is heading to Muscat, Oman in preparation for indirect negotiations scheduled with the United States for February 26 in Geneva, Switzerland.
The Saudi Fiscal Deficit in 2025 Was Larger Than Expected
The Saudi Ministry of Finance has published updated fiscal numbers for 2025. The new data shows a considerably larger fiscal deficit than previously thought. The 2025 deficit is now pegged at 277 billion riyals ($74 billion; 6% of gross domestic product) compared to an estimate of 245 billion riyals ($65 billion; 5.3% of GDP) at the time of publication of the 2026 budget statement in December 2025.
Resigned to War Yet Still Working Toward a Deal
While many Iranian analysts appeared resigned to what they see as an inevitable war with the United States, media outlets affiliated with the Islamic Revolutionary Guard Corps sought to bolster morale by highlighting Iran’s military capabilities. Separately, Iranian officials appeared to be working toward a deal with the United States to prevent a war.
The UAE’s Pitch for Cricket
Far from Italy’s Olympic slopes, the United Arab Emirates and Oman are competing in the International Cricket Council Men’s T20 World Cup, while Gulf-backed sponsors and franchises engage with lucrative South Asian markets. For the UAE, cricket, once a pastime primarily practiced by expatriate communities, has transformed into a strategic sector that intertwines sports, commerce, and regional influence.
Money Talks: U.S.-Iran Negotiations in Geneva
As Iran’s top diplomats prepare for the next round of indirect nuclear negotiations with the United States, their emphasis appears to be on economic incentives for the United States. But have they reached this realization too late? February 16: Economic newspaper Donya-ye Eqtesad reported: “According to announced news, the next round of negotiations between Iran and the United States will be held in Geneva on Tuesday.
Revolution Day in Iran: Celebrating Survival
Overshadowed by the bloody protests that began in December 2025, Iran’s commemoration of the 48th anniversary of the 1979 Islamic Revolution had little to celebrate beyond the regime’s survival. February 11: In a televised address transcribed by Supreme National Security Council mouthpiece Nour News, Supreme Leader Ayatollah Ali Khamenei thanked Iranians for taking part in Revolution Day rallies: “You carried out a great act; you made Iran proud.
Iran’s State-Censored Media Reacts to the Oman Talks
Iran’s state-censored media expressed cautious optimism following the latest round of indirect negotiations between the United States and Iran, but the outlets remain mindful of the risk that the talks could collapse and lead to war.
Oman Negotiations Redux
As U.S. and Iranian representatives gather in Oman for renewed negotiations, the persistent shadow of war lingers over the region.
The Specter of War Over Iran
As the United States expands its military presence in the Gulf, Iranian officials and media outlets aligned with the Islamic Revolutionary Guard Corps have warned that Iran would retaliate forcefully in the event of a U.S. attack.
Iran’s State-Censored Media Reacts to Maliki’s Return to Power in Iraq
Islamic Dawa Party Chair Nuri al-Maliki seems set to return to office as Iraq’s prime minister, and Iranian analysts are weighing in on how Baghdad is likely to navigate its relationships with Iran and the United States.
Government Claims 3,117 Dead in Iran Protests
Iranian government agencies have released an official death toll for the protests that began on December 28, 2025, claiming a total of 3,117 fatalities. Of these, 2,427 were described as “martyrs,” a designation used by the government to include members of the security services, pro-regime demonstrators, or individuals it claims were accidentally killed during clashes between protesters and security forces. None of these figures can be independently verified as long as Iran remains offline.
Defiant Khamenei Blames Trump for the Protests
Supreme Leader Ayatollah Ali Khamenei insists that the regime has suppressed what he calls U.S.-orchestrated “sedition” in which “thousands” were killed by “enemy agents.” But the continued disruption of internet access across Iran, along with ongoing restrictions even on domestic text-messaging services, reveals the regime’s deep fear of renewed protests.
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