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How Saudi Arabia Is Trying To Leave Oil Behind
Saudi Arabia has long been associated with oil, and for decades its economy, public finances, and geopolitical influence have been shaped by hydrocarbon wealth.
Today, however, the kingdom is pursuing one of the most ambitious economic transformations in the world: reducing dependence on oil and building a more diversified, future-ready economy.
This shift is not a symbolic gesture or a short-term policy adjustment; it is a broad national strategy tied to investment, industrial policy, tourism, technology, logistics, and renewable energy.
At the center of this effort is Saudi Vision 2030, a reform program that seeks to reshape the country’s economic model and create new sources of growth beyond crude exports.
Understanding how Saudi Arabia is trying to leave oil behind requires looking at its motivations, its reforms, its major projects, and the practical challenges that stand in the way.
Why Saudi Arabia Wants to Reduce Oil Dependence
Saudi Arabia’s oil-based model has delivered enormous benefits, including high state revenues, world-class infrastructure, and strategic global influence.
Yet the same model has also exposed the kingdom to volatility in global energy markets, where oil prices can rise or fall sharply due to geopolitical tensions, demand shifts, or supply changes.
When oil prices decline, government income falls, fiscal pressure increases, and public spending plans become harder to sustain.
This vulnerability has encouraged policymakers to pursue economic diversification as a long-term national necessity rather than an optional reform.
The logic is straightforward: a more diverse economy is more resilient, more competitive, and less exposed to a single commodity cycle.
Oil Revenues Are Powerful but Unstable
Oil remains the backbone of Saudi Arabia’s economy, and hydrocarbon exports still account for a large share of government revenue and foreign earnings.
Saudi Arabia has long been associated with oil, and for decades its economy, public finances, and geopolitical influence have been shaped by hydrocarbon wealth.
Today, however, the kingdom is pursuing one of the most ambitious economic transformations in the world: reducing dependence on oil and building a more diversified, future-ready economy.
This shift is not a symbolic gesture or a short-term policy adjustment; it is a broad national strategy tied to investment, industrial policy, tourism, technology, logistics, and renewable energy.
At the center of this effort is Saudi Vision 2030, a reform program that seeks to reshape the country’s economic model and create new sources of growth beyond crude exports.
Understanding how Saudi Arabia is trying to leave oil behind requires looking at its motivations, its reforms, its major projects, and the practical challenges that stand in the way.
Why Saudi Arabia Wants to Reduce Oil Dependence
Saudi Arabia’s oil-based model has delivered enormous benefits, including high state revenues, world-class infrastructure, and strategic global influence.
Yet the same model has also exposed the kingdom to volatility in global energy markets, where oil prices can rise or fall sharply due to geopolitical tensions, demand shifts, or supply changes.
When oil prices decline, government income falls, fiscal pressure increases, and public spending plans become harder to sustain.
This vulnerability has encouraged policymakers to pursue economic diversification as a long-term national necessity rather than an optional reform.
The logic is straightforward: a more diverse economy is more resilient, more competitive, and less exposed to a single commodity cycle.
Oil Revenues Are Powerful but Unstable
Oil remains the backbone of Saudi Arabia’s economy, and hydrocarbon exports still account for a large share of government revenue and foreign earnings.
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00:00Saudi Arabia built its wealth on oil, yet it is now spending enormous sums on a new venture that
00:05could make its most valuable oil less important. But the real story isn't why Saudi Arabia is
00:10losing money, but what will replace oil when the world needs less of it. The deficit everyone
00:15misread. Saudi Arabia, the largest oil exporter on the planet, had just watched its budget gap
00:20tier-wide open over three straight months, and the cause sat in plain sight.
00:24The kingdom's budget shortfall for three months through September was 88.5 billion rials,
00:32or 23.6 billion dollars. That single quarter swallowed almost half of the country's entire
00:37yearly deficit. Oil earnings had fallen to about 40 billion dollars, down from nearly 51 billion the
00:43year before, while everything the government still had to pay kept climbing. Then the forecast itself
00:48got worse. Saudi Arabia more than doubles budget gap estimate for 2025. The projected deficit for
00:54the year had jumped to 5.3% of the economy, more than double the earlier guess of 2.3%.
01:00The
01:00kingdom had been running deficits since 2022, and the pressure traced straight back to one falling
01:05number. Oil prices have dropped about 10% this year alone to below $70 a barrel. And here is where
01:11the story flips. Every number you just heard was deliberate. The kingdom chose this on purpose for
01:15a reason that had been 10 years in the making. To understand why a rich country would spend itself
01:19into the red so willingly, you have to rewind to the moment Saudi Arabia decided its own oil was
01:24a trap. On April 25, 2016, the kingdom unveiled a plan called Vision 2030. It was presented under
01:30King Salman and driven by his son, Crown Prince Mohammed bin Salman. For decades, oil had paid for
01:36nearly everything, and the country had grown dangerously comfortable leaning on it. Dependence
01:40was almost total. In the years before the plan, crude covered the overwhelming majority of government
01:45revenue, climbing toward 9 in every 10 rials the state collected in its heaviest years. The petroleum
01:49sector alone drove close to 40% of the entire economy, and roughly 9 out of every 10 dollars the
01:55country earned abroad came from selling oil. Non-oil income was almost an afterthought, often under a
02:00fifth of the total. Then came the crash. Between 2014 and 2016, oil prices collapsed, reserves drained
02:06away, and the deficits arrived. The government drew heavily on its savings just to keep the lights on, and
02:10its reserves shrank at a frightening pace. The kingdom had felt exactly what it feels like to live at the
02:15mercy of a single commodity. So the plan opened with a promise that read like a line drawn in the
02:19sand. We will not allow our country ever to be at the mercy of a commodity price volatility or
02:25external markets. The blueprint was enormous. 85 pages, built on three pillars the kingdom named a
02:30vibrant society, a thriving economy, and an ambitious nation. It leaned on three strengths the leadership
02:35believed no rival could copy. Saudi Arabia was the heart of the Arab and Islamic worlds, home to the two
02:40holy mosques. It held deep pockets with a sovereign fund it planned to grow into a giant, and it sat
02:44at a
02:45crossroads connecting Asia, Europe, and Africa. The document even spelled out where the country's
02:50future truly lay. Our real wealth lies in the ambition of our people and the potential of our
02:55younger generation. The economic targets were bold on paper, cut Saudi unemployment from more than 12%
03:01down to 7, lift women in the workforce from 22% up to 30, raise the private sector from 40
03:06% of the
03:06economy to 65, and grow non-oil exports from 16% of non-oil output all the way to half.
03:12It also set out to
03:13remake the country's place in world trade, aiming to lift its logistics ranking from around 49 toward
03:18the top 25. The whole thing was broken into dozens of programs, from a national transformation program,
03:23to a fiscal balance program, to a privatization program, each one chipping at the same wall.
03:28Some hunted for fresh income, others lined up state assets for sale, and every one of them pointed
03:32away from crude. The man running the industrial side of that promise made the mission sound almost
03:37simple. He had spent more than 16 years inside Saudi Aramco before the vision pulled him into
03:42government, and he described the whole point in a single breath. So the deficits were never a shock
03:51to the people who wrote the plan. They were the price of admission. The finance minister has said it
03:56out loud, standing in front of the entire national budget, refusing to apologize for the red ink on the
04:01page. A strategic deficit, the logic is blunt. Borrow roughly 245 billion real now, build now,
04:13and make sure the return beats the cost of the borrowing. Most of that spending pays back after
04:17years, not in the same season it goes out. The non-oil economy was already growing at around 5%
04:22a year, and the government was gambling that it could grow far larger. The latest budget laid the scale
04:26bear, with spending of roughly 1.34 trillion real set against revenue near 1.09 trillion,
04:32leaving exactly that gap to be borrowed and put to work, and the early scorecard was landing ahead
04:37of schedule. Five years into the plan, the kingdom said it had hit 93% of its performance targets,
04:42with most of its hundreds of initiatives either finished or on track. The first stretch from 2016
04:47to 2020 had been spent tearing up old rules and rewiring the system for what came next. That left only
04:52one
04:52question hanging in the air, where was all of that borrowed money actually going? And the answer is
04:57a machine unlike anything the modern world has ever attempted. The machine they are building.
05:02Every giant bet needs a bank, and Saudi Arabia built one of the largest on earth. It is called the
05:07Public Investment Fund, and around 2015 the crown prince took what had been a quiet government fund
05:11and turned it into the engine of the entire transformation. By 2025, it was managing somewhere
05:16between $900 and $925 billion, up from a small fraction of that only a decade before. Today it
05:23describes itself as an architect and a steward, building six connected ecosystems and pulling
05:28private money in beside its own, with a long-term goal set well above $2 trillion. Here is the clever
05:33part and the strange part. A huge slice of that money flows straight out of oil. The government has
05:38handed the fund a 16% stake in Saudi Aramco after a transfer in 2024, and Aramco pays out tens
05:44of
05:44billions in dividends every single year. So the fund quietly spends oil wealth to buy a future
05:49without oil. Hold on to that thought, because it becomes the twist of this whole story. The fund
05:53pours that cash into what the kingdom calls gigaprojects, and their combined price tags run
05:57well past a trillion dollars. The most famous is NEOM, a futuristic region in the northwest roughly the
06:03size of a small country. Its centerpiece was The Line, a mirrored city meant to stretch 170 kilometers
06:08straight across the open desert. NEOM was never only The Line though. It also promised Trojana, a mountain
06:13resort built to host winter sports in the desert, and Oxagon, a floating industrial port on the Red
06:19Sea. So far we achieved great results, and some of them reached to what we call the irreversible
06:26change. The people building it insist the change has already gone too far to reverse. But irreversible
06:31did not mean untouchable. From late 2025, work on The Line was slashed hard. Only about 2 kilometers of
06:37foundations had been seriously built, and the plan for 1.5 million residents by 2030 was cut to a small
06:42share of that. The costs had ballooned, and the kingdom quietly picked discipline over spectacle.
06:47One piece of NEOM did push ahead of the rest. An $8.4 billion green hydrogen plant built with ACWA
06:54power and air products, reported past 80% complete and designed to pump out 600 tons of clean hydrogen a
07:00day. And not every project stumbled. Red Sea Global is one of the furthest along, with its own airport
07:06already running and luxury resorts opening their doors, even if some sit a year or two behind schedule.
07:11Near Riyadh, the entertainment city of Kidia sprawls across more than 360 square kilometers,
07:16sold as the first city built entirely for play. On December 31, 2025, Six Flags Kidia City opened its
07:23gates, led by Falcon's Flight, a roller coaster billed as the tallest, fastest, and longest on the
07:28planet. Other projects moved on quieter tracks, from Diriyah rebuilding the mud-brick birthplace of the
07:33Saudi royal family into a heritage capital, to R-O-S-H-N throwing up entire housing communities.
07:38The transformation reached into logistics too. Sitting between three continents, the kingdom
07:42opened a special zone at its main Riyadh airport and rewrote the rules so global firms could base
07:47themselves there. An Apple distribution center that once served the country from Europe, now runs out
07:51of Riyadh, moving billions of riyals of goods across the wider region every year. The country has licensed
07:57more than a thousand logistics companies and is building dozens of new logistics centers to match.
08:01The kingdom is also trying to make far more of what it once bought from abroad. Under a made-in
08:05-Saudi push,
08:06the government rewrote its own purchasing rules so state contracts must favor local products,
08:11which pours a steady stream of orders into homegrown factories. Plants making medicine,
08:15machinery and processed food have started shipping overseas, backed by a new export bank built to
08:20help them reach foreign shelves. It is even reaching for high technology, with a state-backed
08:24company called Allat, launched in 2024, aiming to build electronics and AI hardware at home, while the
08:30country pushes to make more than half of its military spending local by 2030. And behind the theme parks,
08:35the core numbers finally moved. For the first time ever, non-oil activity crossed 55% of the real
08:41economy in 2025. The finance minister called it a historic line to cross.
08:53The rest of the scoreboard backed him up. Saudi unemployment fell to 7.2%, down from 12.3% in
09:002016, hitting the original target years ahead of schedule. Women in the workforce climbed to about
09:0535%, sailing past the old goal of 30. The private sector now drives 51% of the economy,
09:10and small businesses have multiplied from around half a million a few years ago to some 1.7 million,
09:16supporting close to 9 million jobs, and then tourism simply exploded. The kingdom pulled in
09:21roughly 122 to 123 million visitors in a single year, who spent around $80 billion, with more than
09:2818 million pilgrims arriving for Umrah from abroad. The old dream of 100 million visitors had already
09:33been beat, so Saudi Arabia raised the bar toward 150 million by 2030. It is also chasing half of its
09:39electricity from renewables, with the Sudir solar plant and the Dumat al-Jandal wind farm feeding a
09:44grid that has already planted more than 151 million trees under its green push. Then there is what lies
09:50buried under the ground, far beyond the oil. And the left side is the Arabian shield. It's full of
09:57minerals, and specifically critical minerals. That western half of the country holds gold, copper,
10:03phosphate, and the rare metals the entire world needs for its own energy shift. A massive survey has already
10:08doubled the kingdom's known mineral wealth to about 9.4 trillion riyal, and mining is being groomed as
10:13a third pillar to stand beside oil. The kingdom rewrote its mining law to slash taxes and hand out
10:18licenses in bulk, and its national miner Madden is pushing deeper into gold, copper, and phosphate.
10:23It even built its own Future Minerals Forum to pull the industry's biggest players to riyadh year after
10:28year. The scoreboard looks like a miracle caught in progress, but every single number on it hides the
10:33exact same quiet catch. The paradox at the heart of it all. Here was that catch.
10:38For all the non-oil headlines, oil still pays most of the government's bills. Non-oil income has more
10:43than doubled since the plan began, and now brings in a record 40 to 46 percent of what the state
10:48collects. Yet crude still supplies the majority of budget revenue, and the price it needs just to
10:52break even sits painfully high. Independent estimates have pegged that break even anywhere from
10:5780 to over $100 a barrel in recent years. The kingdom's debt has climbed steadily from very
11:02low levels, though it stays modest next to most large economies. When oil dips, the deficits come
11:07rushing back, and early in 2026, another quarter of falling oil revenue pushed the gap wider again,
11:13exactly like the report that opened this story. And one outside estimate put the gap in the starkest
11:17terms possible. Bloomberg Economics predicts the kingdom needs oil prices at $94 a barrel to fix
11:24its current finances. $94 a barrel, while oil was actually trading below $70. That gap is the entire
11:30problem written in one line. So much of the new growth still leans on government spending and the
11:35funds gigaprojects, and a lot of it sits in construction, retail and public services, sectors
11:39that feed on state demand more than on exports. It is not yet standing fully on its own two feet,
11:44and nothing shows that risk more clearly than NEOM. The full dream of NEOM was once priced in the
11:49trillions, and its sheer scale simply outran the budget, which is what forced the cutbacks we saw
11:54earlier. It became the loudest warning that ambition by itself does not build a new economy.
11:58The harder targets tell the same story. Foreign investment sits near 2.8% of the economy,
12:04still short of the 5.7% goal. And non-oil exports remain around 22% of non-oil output,
12:10a long way from the target of half. Even the clean power goal is a stretch,
12:13since reaching half the grid by 2030 means bolting on more solar and wind almost every single year
12:19than the country managed across the entire decade before, plus the storage and power lines to carry
12:24it. On those exports, the minister argues the country is only at the starting line,
12:27because a factory takes years to move from breaking ground to filling shipping containers.
12:31So much of the recent industrial build-out has not shown up in the trade figures yet. And even as
12:36global growth slows toward 3%, the non-oil economy has kept expanding at around 5%, which is the engine
12:42the entire plan is betting on. Still, the government refuses to flinch on the spending.
12:46The finance minister frames the borrowing as productive debt, the kind that builds projects,
12:51creates jobs and pays for itself over time. And the ratings agencies have largely agreed with him,
12:55holding or even lifting the kingdom's credit score even as the debt grew. By the plan's own count,
13:00some 1.2 million people have started businesses under Vision 2030, and many of them now employ others.
13:05He also points to the fund itself, which he says grew from around $150 billion to roughly $800 billion
13:11in only a handful of years, calling it the opening move in a game measured in decades. The kingdom now
13:16labels this its sustainability phase, the point where the spending is finally meant to start paying
13:21its own way. The minister has drawn one hard line through the whole approach. In the past,
13:25when oil money fell the kingdom slashed its spending, and when oil money rose it spent freely again.
13:30This time, he says, the plan is to hold steady no matter where the price of crude goes,
13:34pushing total spending up from about 1.3 trillion riyal in 2026 toward 1.4 trillion by 2028.
13:40Even while chasing the megaprojects, the government says it is still pouring more than
13:44500 billion riyal a year into health, education, and basic services for its people. So the honest
13:50verdict is that Saudi Arabia is deep in the middle of this journey, still years from the finish line.
13:55Non-oil activity is now the bigger half of the economy, yet oil is still the fuel paying for
14:00the escape from oil. The fund's power to spend tens of billions a year on gigaprojects
14:03still rides on Aramco's dividends, which rise and fall with the very barrels the kingdom
14:07is trying to move beyond. Which raises the obvious question, when will the kingdom finally
14:11break free and never need a single barrel again? A journalist asked the finance minister exactly
14:16that. His answer stunned the room.
14:25Read that one more time. The man in charge of the money hopes the country never fully leaves oil
14:30behind. It sounds completely backwards, right up, until he explains what that day would actually
14:34mean for a nation still sitting on decades of the stuff.
14:39And there it is. Vision 2030 was built to use oil while it is still valuable, and to pour that
14:43wealth
14:43into an economy that can outlive the barrels. The plan is to grow non-oil income until it can cover
14:48the budget on its own, then invest whatever is left, from oil and non-oil alike, for the generations
14:52still to come. The fund, the gigaprojects, the tourists, and the mines are all meant to turn a
14:56resource that eventually runs dry into something that never does. So the real question was never
15:01whether Saudi Arabia can leave oil behind. It is whether the kingdom can turn its oil into a future
15:05that truly lasts, and do it faster than the rest of the world moves on. The deficits, the cutbacks,
15:10and the giant bets are every one of them a piece of that race, and the next few years
15:14will decide who is right. Click on one of the cards on your screen to see more videos like this.
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