Saudi Arabia is grappling with significant economic challenges as oil prices have plummeted to $66 per barrel, severely impacting its budget and economic transformation plans.

The International Monetary Fund has indicated that the kingdom requires oil prices to exceed $90 per barrel to balance its budget, while Fitch Ratings projects a fiscal deficit of 4.1% of GDP for 2025.

A decline of just $10 in oil prices could exacerbate the budget deficit by approximately 3 percentage points, highlighting the fragility of the country's fiscal situation.

Contributing to this downturn, global oil prices have fallen due to factors such as the US-China trade war and increased production from OPEC+ members, with Brent crude losing around $10 since the beginning of April 2025.

Looking ahead, Goldman Sachs forecasts that Brent crude will average $63 for the remainder of 2025, while BMI anticipates an average of $68, both of which could further strain Saudi Arabia's fiscal health.

In response to these pressures, the Saudi Arabian Oil Company (Aramco) has announced plans to reduce its dividend payments from $124 billion in 2024 to approximately $85 billion in 2025, which will further strain government finances.

To address budget shortfalls, Saudi Arabia plans to raise $37 billion in 2025 through both domestic and global borrowing, a move supported by a recent credit rating upgrade from Moody's.

Economic analysts suggest that the government may need to consider new taxes or adjustments to existing tax rates to boost non-oil revenue, as part of its broader fiscal strategy.

Amid these financial adjustments, the Public Investment Fund is recalibrating its plans for major projects, focusing on those with fixed timelines tied to international events such as Expo 2030 and the FIFA World Cup 2034.

Despite these challenges, the non-oil sector remains crucial for Saudi Arabia's economy, which experienced a 4.3% growth in 2024, although potential spending cuts may hinder future growth.

Ultimately, Saudi Arabia faces the daunting task of balancing immediate fiscal needs with its long-term Vision 2030 objectives in the face of ongoing economic challenges.