Saudi Arabia’s revenue from oil exports has dropped to its lowest level in three years, raising concerns about the kingdom’s ability to sustain its ambitious economic plans. In June, Saudi Arabia earned just $17.7 billion from oil sales abroad, marking a 9% decrease from the same time last year and a 12% decline from May. This decline comes as the kingdom has been cutting oil production in an effort to support prices, yet Brent crude is currently trading at around $76 per barrel, significantly lower than the $91 per barrel it reached in April.
The reduction in revenue puts pressure on Saudi Arabia as it seeks to finance Crown Prince Mohammed bin Salman’s Vision 2030, a series of economic and social reforms aimed at diversifying the economy and reducing the kingdom’s dependence on oil. The IMF estimates that Saudi Arabia needs oil prices to be at $96.20 per barrel to balance its 2024 budget. However, with current prices falling short, the kingdom has had to scale back some of its major projects.
One of the most notable cutbacks is the Neom project, a $1.5 trillion megacity that was initially envisioned to be 33 times the size of New York City. Plans have now been downsized, with the city expected to house fewer than 300,000 residents by 2030, far below the original projection of 1.5 million. Additionally, only 2.4 km of the planned 170 km straight-line city is expected to be completed by 2030.
Saudi Arabia’s efforts to stabilize oil prices through OPEC+ have seen the kingdom taking the lead in production cuts. While Saudi Arabia has been reducing its output, other members of the alliance, such as Russia and the UAE, have benefited, with the UAE securing a special exception to boost its production by 300,000 barrels a day in 2025.
The drop in oil revenue and the subsequent economic adjustments highlight the challenges Saudi Arabia faces as it tries to navigate global economic uncertainties while pursuing its ambitious Vision 2030 goals.
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