Saudi Arabia’s Trade Surplus Narrows Sharply Amid Oil Export Slump and Rising Import Demand

Written By Shruti Kant

Saudi Arabia’s trade surplus fell to SAR 14.2 billion (USD 3.78 billion) in April 2025, marking a sharp 62% year-on-year decline from SAR 37.0 billion in April 2024. This represents the smallest trade surplus since December 2024, highlighting growing imbalances in the Kingdom’s external trade as oil revenues weaken and import demand surges. The data, published by the General Authority for Statistics (GaStat), reveals key shifts in the structure of both Saudi exports and imports, with important implications for fiscal planning, industrial policy, and Vision 2030 targets.

Oil-Led Export Contraction: A Structural Rebalancing or Temporary Setback?

Total exports fell 10.9% year-on-year to SAR 90.3 billion, the lowest in seven months. The contraction was almost entirely driven by a 21.2% collapse in oil exports, which still comprised 68.6% of total exports. This decline underscores the dual impact of:

  1. Lower oil prices following easing tensions in the Middle East and weakening global demand.

  2. Soft OPEC+ production quotas, under which Saudi Arabia continues to shoulder a disproportionate share of voluntary supply cuts—currently holding production near 9 million barrels per day, well below its potential capacity of 12 million bpd (IEA, 2025).

While oil exports slumped, non-oil exports surged by 24.6%, reflecting diversification gains under the Vision 2030 strategy. Chemicals, plastics, and industrial metals were key drivers of non-oil growth, with semi-processed aluminum and petrochemical derivatives seeing particularly strong demand from Asian and GCC buyers.

China, Japan, UAE Remain Key Export Destinations

China maintained its position as the largest buyer of Saudi exports, accounting for 12.6% of the total. It was followed by Japan (10.1%) and the United Arab Emirates (9.8%). However, exports to Europe showed signs of weakening, amid slowing industrial output in Germany and softening energy demand due to warmer-than-expected spring temperatures and high gas reserves.

Surge in Imports: Machinery and Transportation Equipment Lead

Imports grew 18.3% year-on-year, reaching SAR 76.1 billion, fueled by robust investment in infrastructure, logistics, and industrial upgrades.

  • Machinery, electrical equipment, and parts saw a 25.4% rise, making up 27.7% of total imports. This reflects expanding industrial capacity in regions like NEOM and the broader Red Sea Project, where automation and smart infrastructure are key themes.

  • Transportation equipment and parts surged by 64.5%, now accounting for 17.2% of all imports. This includes aircraft components, electric vehicles, and rail equipment tied to megaprojects like the Riyadh Metro and King Abdulaziz Public Transport initiatives.

China: Dominant Trade Partner on Both Sides of the Ledger

China not only remained the largest export destination but also the top import source, supplying 25.0% of Saudi imports. This underscores Beijing’s deep integration into Riyadh’s supply chains—spanning telecom infrastructure, solar equipment, construction machinery, and EV components.

The United States came in second at 7.5% of imports, driven largely by defense and aerospace technologies. The UAE, acting both as a hub and re-exporter, accounted for 6.8% of imports.

Outlook: External Pressures Mounting Despite Internal Resilience

The sharp narrowing of the trade surplus is unlikely to trigger immediate macroeconomic distress, as Saudi Arabia maintains large fiscal reserves and benefits from strong domestic demand and diversification momentum. However, several risks loom:

  • Prolonged weakness in oil markets—with Brent averaging under USD 70/bbl—could squeeze fiscal space and slow the Public Investment Fund’s deployment into mega-projects.

  • High import dependence for capital goods raises vulnerability to global supply chain shocks or geopolitical frictions, especially with China.

  • Exchange rate peg pressure remains contained but could intensify if external surpluses deteriorate further, forcing greater drawdowns from the Saudi Arabian Monetary Authority’s (SAMA) foreign reserves.

That said, non-oil export resilience and infrastructure-linked imports suggest a structural transformation is underway, even if still at a nascent stage. As Vision 2030 targets ramp up, short-term trade deficits may become more common—but ideally as a bridge to longer-term competitiveness.

Key Takeaways:

  • Trade surplus narrowed to SAR 14.2B in April 2025, down 62% y/y.

  • Oil exports fell 21.2%, dragging total exports to SAR 90.3B.

  • Non-oil exports rose 24.6%, led by chemicals and aluminum.

  • Imports rose 18.3% to SAR 76.1B; machinery and transport drove growth.

  • China remained top trade partner, accounting for 12.6% of exports and 25.0% of imports.

  • Short-term trade pressure is rising, but long-term diversification signals are positive.

Sources:

  • General Authority for Statistics, Saudi Arabia (2025). Monthly Trade Bulletin – April 2025

  • International Energy Agency (2025). Oil Market Report – June Edition

  • SAMA (2025). Foreign Reserves and Balance of Payments Summary

  • Bloomberg Terminal (Accessed June 25, 2025)

  • Reuters (2025). Saudi Trade Surplus Narrows on Lower Oil Exports, Higher Imports

Shruti Kant

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