The Saudi economy records record contraction due to a decline in oil production

The Saudi newspaper “Al-Eqtisadiah” revealed on Tuesday that the Saudi economy contracted by 4.8% year-on-year in the second quarter of 2026, its largest decline since the start of official data collection in 2011.

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The newspaper attributed the decline to a 26% drop in oil production, coinciding with a 24.7% contraction in the oil sector, which directly reflected on the Kingdom’s gross domestic product.

The contraction comes amid growing disruptions in navigation through the Strait of Hormuz and Bab Al-Mandeb, and the resulting repercussions on oil exports and supply chains, at a time when the oil sector represents a main pillar of the Saudi economy.

This coincided with Saudi facilities and infrastructure being subjected to attacks in recent weeks, along with disrupted navigation in the Red Sea and affected air traffic in a number of airports in the south of the Kingdom.

These indicators point to escalating economic pressures facing Saudi Arabia in parallel with security and military developments in the region, amid growing challenges to the Kingdom’s ability to maintain oil production and export levels.