S&P Affirms Saudi Arabia at A+ As Strong Buffers Offset Regional Risks

RIYADH: S&P Global Ratings affirmed Saudi Arabia’s sovereign credit rating at A+ with a stable outlook, saying the Kingdom’s fiscal buffers, export flexibility and non-oil growth should help it withstand escalating regional conflict. 

The agency maintained its “A+/A-1” long- and short-term foreign and local currency sovereign ratings, citing Saudi Arabia’s ability to reroute crude exports through the Red Sea, draw on storage capacity and raise production once regional tensions ease. 

It also reflects confidence that continued non-oil economic growth and related revenue streams, alongside the government’s ability to adjust investment spending linked to Vision 2030, will help sustain the country’s economic and fiscal performance. 

This comes following Israeli and US strikes on Iran on Feb. 28, with tensions across the Middle East having escalated significantly, disrupting global energy markets. 

The Strait of Hormuz, which normally carries about one-fifth of the world’s oil shipments, is effectively closed to most international shipping after Iran imposed restrictions on transit.  

As a result, hydrocarbon supplies have been affected, pushing Brent crude oil close to $120 per barrel by March 9 before easing to around $101 by March 13, compared with $72.5 on Feb. 27 and an average of $66 in January 2026. Natural gas prices have also risen sharply. 

In its latest report, S&P stated: “We forecast real GDP (gross domestic product) growth of 4.4 percent for 2026. This partly reflects our assumption of oil production increasing to an average 10.1 million barrels per day, from 9.5 mbpd in 2025, and higher oil prices in 2026, given that the risk premium in the market has pushed global oil prices higher.” 

It added: “For 2027-2028, we forecast real GDP growth will average 3.3 percent per year. Our base case is that production closures due to targeted attacks will not have a prolonged impact on supply. This is because we anticipate Saudi Arabia will make full use of the East-West pipeline and storage facilities, and will increase production after the conflict wanes, to compensate for any lost oil production.” 

S&P further noted that a ratings downgrade could occur if the regional conflict intensifies or persists long enough to significantly weaken Saudi Arabia’s economic growth, fiscal position, and external balances, or if government debt rises sharply and erodes public finances.  

Conversely, an upgrade could be considered over the next two years if tensions ease and reforms, along with strong non-oil growth, drive economic diversification, boost GDP per capita, and support stronger fiscal revenues and consolidation.