Overview:

Saudi Arabia's economy demonstrated resilience in the first quarter of 2026, with real gross domestic product growth of 3.0 percent compared to the same period last year, driven by balanced contributions from both oil and non-oil sectors. Simultaneously, global commodity markets experienced significant volatility following diplomatic developments in the Middle East, with crude oil prices declining over 5 percent while precious metals surged on geopolitical risk considerations.

Details:

The Kingdom's economic performance reflects diversification efforts under Vision 2030, with non-oil activities providing steady growth momentum alongside hydrocarbon production. Official data confirmed inflation moderated to 1.8 percent year-on-year in May 2026, providing price stability for consumers and businesses. The stock market declined, with the main index closing 8 points lower at 11,095 points on trading volume of 6.5 billion riyals.

International energy markets experienced sharp corrections this week. Benchmark crude oil prices fell approximately 4-5 percent to near three-month lows following announcements of a preliminary agreement between the United States and Iran to end hostilities. West Texas Intermediate traded below 80 dollars per barrel, reflecting reduced geopolitical risk premiums. Conversely, gold prices appreciated more than 2.5 percent as investors reassessed safe-haven demand amid shifting regional tensions.

Real estate activity contracted significantly, with residential transaction volumes declining approximately 50 percent during the first quarter compared to previous periods. Meanwhile, bilateral trade partnerships expanded, with Saudi-British commercial exchanges totaling 680 billion riyals over the past decade. The government advanced infrastructure and human development initiatives, allocating 23 billion riyals toward capacity-building programs and educational initiatives.

Outlook:

Investors are monitoring whether the U.S.-Iran diplomatic breakthrough sustains longer-term oil price stability, potentially benefiting export-dependent economies while affecting energy-intensive sectors differently. Regional economic integration efforts, evidenced by multiple energy and trade memoranda signed with international partners including South Korea and China, will shape investment flows and diversification trajectory in coming quarters.