Saudi Arabia’s economy is likely to contract by 2.8% this year before rebounding to 5.1% growth in 2027 and accelerating to 6% in 2028, assuming a gradual recovery in oil production and exports, according to top ratings agency Moody’s.
The agency forecasts brent crude prices to average $90 per barrel in 2027, supported by higher geopolitical risk premiums and the need to replenish depleted inventories. These factors are expected to sustain upward pressure on prices even if geopolitical tensions ease.
In its latest global economic outlook for 2027-2028, Moody’s said GCC economies remain particularly exposed to the fallout from the Middle East conflict, especially countries with limited capacity to export oil and gas through pipelines bypassing the Strait of Hormuz.
Government support has helped sustain non-oil economic activity, but the conflict has undermined perceptions of regional stability, which had been instrumental in attracting foreign investment and supporting tourism, stated the top ratings agency.
Nine months into the conflict involving the US, Israel and Iran, the prospects for a swift or lasting resolution remain uncertain, according to Moody’s.
Independent estimates indicate that oil and refined product exports through the Strait of Hormuz have recovered to about two-thirds of pre-conflict levels, although flows remain highly volatile.
The agency also highlighted an increase in so-called dark fleet operations, with tankers transporting oil through the Omani corridor with their transponders switched off to avoid detection, reportedly under the protection of US military escorts.
Iran has stepped up attacks on vessels in an effort to raise the risks and costs of using the southern route and reassert control over the waterway, stated Moody’s in its review.
The first three weeks of October recorded more attacks than any comparable period since the conflict began. Tanker freight rates and war-risk insurance premiums have also risen sharply, while shipping activity remains highly volatile, the agency said.
On some days, vessel traffic approaches pre-conflict levels as ships gather to transit the Omani corridor, while on others it slows to a near standstill, he added.
