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. The surplus on the travel account narrowed with visitor spending in Saudi Arabia remaining below preconflict levels, while remittance outflows surged to their highest-ever level of $18.2 billion, up over 30% year on year.

Source: Saudi central bank
Note: Financial inflows are defined as the sum of direct investment, portfolio, and “other inflows.” A positive number is an inflow into Saudi Arabia.

There was much less action recorded in the financial account than in the first quarter. The first quarter saw significant movements in financial asset holdings as Saudi residents sought liquidity in the early days of the conflict. They sold close to $23 billion of foreign equity (the largest quarterly sale on record), increased their deposits at foreign financial institutions by $13 billion, and borrowed $27 billion from nonresidents. The second quarter was more mundane, although not without questions. Saudi residents renewed purchases of foreign equities (by around $9 billion) and issued debt securities of $5 billion. It is not clear, however, if the data includes the Public Investment Fund’s purchase of SpaceX equity in June.

Foreign direct investment into the Saudi economy weakened slightly in the second quarter. While this investment does not appear to have been overly affected by the conflict, it is also not showing the upward trend that has been targeted under Vision 2030. Foreign direct investment by Saudi residents overseas fell sharply in the quarter but should rebound in the third quarter with the completion of the PIF’s leverage buyout of EA Sports in August.

Strong Position

The balance of payments continued to be affected by the impact of the regional conflict in the second quarter although less so than in the first quarter. Non-oil exports, imports, and tourism spending all remained below prewar levels and are unlikely to fully recover until the conflict ends. Worker remittances are also likely to stay above prewar levels. The outlook for oil exports is more uncertain. Export volumes through the Strait of Hormuz are reported to have picked up in September even as exports through the Red Sea have been curtailed by the attack on the East-West pipeline. With oil prices around $100 per barrel, higher export volumes will lead to higher oil revenue in the short term. The question is how long this can be sustained.

Nevertheless, Saudi Arabia has an enviably strong external position. The Saudi central bank held foreign exchange reserves of around $490 billion as of the end of August, and other public sector entities also have large foreign asset holdings. These holdings provide a considerable financial buffer to help the kingdom manage periods of economic and geopolitical uncertainty.

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