Saudi GDP falls 3.8% as war hits oil output

Saudi Arabia's economy contracted 3.8% year over year in the third quarter, preliminary figures from the General Authority for Statistics showed on Sunday. It was the second consecutive quarterly decline, as war involving Iran and escalating conflict with Yemen's Houthi rebels disrupted oil production and exports.

The contraction was smaller than the 4.7% fall in the second quarter. It marked the first consecutive quarterly declines since 2023. Oil sector activity plunged 20.4%, improving from a 24.8% contraction in the previous quarter, as attacks on energy infrastructure continued to hit production and shipments.

Oil hit, non-oil holds up

Non-oil activity expanded 1.9%, showing relative resilience in industries central to Saudi Arabia's economic diversification strategy. The figures reflect disruption from the eight-month U.S.-Iran conflict, which has triggered attacks on Gulf energy facilities and restricted shipping through the Strait of Hormuz.

Saudi Arabia has partially offset the disruption by redirecting crude shipments through a pipeline connecting its eastern oil fields to a Red Sea export terminal. The third-quarter data also captures a temporary shutdown of that pipeline in September following attacks. But it predates the subsequent recovery in Saudi crude exports to wartime highs.

Outlook uncertain after October escalation

The economic outlook has become more uncertain after fighting between Saudi-led forces and the Iran-backed Houthis escalated in October. Houthi missile and drone attacks disrupted flights at Riyadh's airport, forced changes to major investment events and interrupted activity in the capital's financial district.

Brent crude has traded above $115 a barrel. Concerns are increasingly shifting toward the impact of the conflict on non-oil businesses. The International Monetary Fund said Saudi Arabia's financial reserves and alternative oil-export infrastructure were helping cushion the economic damage, leaving the kingdom better positioned than several Gulf neighbors.

Saudi authorities previously projected a 3.6% economic contraction in 2026 and raised their expected budget deficit to 4.9% of GDP.

What it means for Nigeria

For Nigeria, the key figure is Brent above $115 a barrel. Crude sales are a major source of dollar inflows, so sustained high prices matter for the naira and for businesses that depend on imports.