Azernews.Az

Akbar Novruz

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Saudi Arabia's economy contracted by 4.8% year-on-year in the second quarter of 2026, marking its steepest quarterly decline since the COVID-19 pandemic, AzerNEWS reports.

The agency attributed the slowdown primarily to disruptions in oil exports caused by tensions in the Strait of Hormuz during the conflict between the United States and Iran.

According to the report, output in Saudi Arabia's oil sector fell by 24.7% in April-June, reversing the 2.9% growth recorded in the first quarter. Oil production also remained below pre-conflict levels.

The International Monetary Fund (IMF) forecasts Saudi Arabia's economic growth will slow to 1.7% in 2026 before accelerating to 5.5% in 2027, supported by the kingdom's economic diversification initiatives.

Following the launch of US and Israeli military operations against Iran on February 28, Tehran announced restrictions on vessels linked to the United States, Israel and countries supporting them in the Strait of Hormuz—a strategic maritime corridor through which roughly 25% of global oil trade passes.

Although Washington and Tehran signed a memorandum of understanding in June providing for an immediate cessation of hostilities, Bloomberg noted that renewed violations of the ceasefire have revived security concerns despite the partial restoration of Saudi oil exports through the route.