Saudis to borrow $8 billion amid economic fallout of US-Israel war on Iran: Report

Saudi Arabia plans to raise at least $8 billion from a fresh loan, as the US-Israel war of aggression on Iran has severely impacted the economy of the oil-rich kingdom, according to a report. 

Saudi Arabia’s National Debt Management Center has begun early talks with banks about a potential deal, Bloomberg reported, quoting people familiar with the issue.

According to the report, Saudi Aramco, officially the Saudi Arabian Oil Company, is also holding discussions with banks. Both potential transactions are still at an early stage and may not ultimately proceed, the sources said.

This comes as Riyadh steps up its efforts to diversify funding sources amid the economic fallout from the war.

Following the US-Israeli aggression, Iran closed the Strait of Hormuz, the primary export route for oil produced by Saudi Arabia and other Persian Gulf Arab states. The war has also raised import costs and strained supply chains.

Yemen’s armed forces have also intensified their retaliatory attacks against key targets in Saudi Arabia and blocked Saudi shipping at the Red Sea gateway in retaliation for the Saudi strikes and blockade on their country.

Saudi Arabia’s economy recorded its steepest contraction since the COVID-19 pandemic in the second quarter, with the attacks contributing to about a 25% fall in the oil sector.

While the war also pushed up oil prices, Saudi Arabia posted a 34.3 billion-riyal ($9.1 billion) second-quarter deficit.

The latest outreach follows the NDMC’s May announcement that it had completed its annual borrowing plan, covering approximately 90% of its financing needs. The institution said any remaining requirements would be met mainly through private channels and domestic markets.

The kingdom has emerged as one of the most active emerging-market borrowers, raising about $6 billion in domestic and international bonds this year, while Aramco has secured another $4 billion. Its sovereign wealth fund raised $7 billion in May, one of the first public-market deals since the US-Israeli war began.

Late last year, the NDMC secured a $13 billion, seven-year syndicated loan, an unusual step that underscored the kingdom’s efforts to tap non-market sources of funding to finance Crown Prince Mohammed bin Salman’s diversification plan.

The US and Israel launched another round of aggression against Iran on February 28, some eight months after carrying out unprovoked attacks on the country.

Iran swiftly retaliated by launching barrages of missiles and drones at the Israeli-occupied territories, as well as US bases and interests across the region.

A ceasefire took effect on April 7, and on June 18, the presidents of Iran and the United States signed a memorandum of understanding (MoU) to end the war and begin a 60-day diplomatic process to resolve the differences.

However, renewed US strikes have once again triggered Iranian retaliation.

Press TV’s website can also be accessed at the following alternate addresses:

www.presstv.ir