outlook

RIYADH: S&P Global Ratings affirmed Saudi Arabia’s long- and short-term sovereign credit ratings at A+/A-1, with a stable outlook, saying the Kingdom’s diversified energy infrastructure and fiscal buffers will help it withstand pressures from the ongoing Middle East conflict.

The stable outlook reflects S&P’s assessment that Saudi Arabia can absorb the impact of regional disruptions while maintaining non-oil growth and fiscal flexibility. The agency highlighted the Kingdom’s ability to redirect crude exports to the Red Sea through the East-West oil pipeline, as well as its substantial oil storage and refining capacity at home and abroad.

S&P expects real gross domestic product to contract 0.9 percent in 2026, before rebounding 8.2 percent in 2027 on higher oil production. Growth is then forecast to average 3.3 percent in 2028 and 2029. The sharp swing reflects the impact of the current disruption on oil activity and the expected increase in production next year.

“The authorities and the country’s sovereign wealth fund are recalibrating the pace of project implementation under Vision 2030, which should help contain fiscal deficits and the pace of general government debt accumulation,” S&P said.

The agency noted that non-oil activities have remained resilient despite regional tensions, supported by continued consumer spending, with the non-oil sector, including government activities, now accounting for around 70 percent of GDP, up from 65 percent in 2018.

The affirmation follows Fitch Ratings’ July decision to maintain Saudi Arabia’s “A+” rating with a stable outlook, citing strong fiscal buffers. The International Monetary Fund also upgraded its 2027 growth forecast for the Kingdom to 5.5 percent from 4.5 percent in April, citing its diversified export infrastructure.

Fiscal picture

S&P forecasts a fiscal deficit of 5.8 percent of GDP in 2026, narrowing to an average of 3.4 percent of GDP in 2027-29. The agency also identified Saudi Arabia’s substantial net general government asset position as a key credit strength and said foreign-exchange reserves had reached their highest level since early 2020.

Daniel Al Banna, financial market analyst and wealth management specialist at Hewar Group, told Arab News the affirmation is a strong recognition of the Kingdom’s economic resilience and strategic strength.

He noted that Saudi Arabia had demonstrated strong strategic thinking, flexibility and the ability to protect the continuity of its economic activity without becoming directly involved in the conflict.

Al Banna said: “The rating reinforces Saudi Arabia’s position as one of the strongest sovereign credit stories in the region,” describing current geopolitical pressures as “primarily short-term factors” that have not altered the Kingdom’s broader economic trajectory.

Saudi Arabia on Friday announced it had to temporarily shut down the key east-west pipeline after drone attacks on Thursday from an Iranian-backed militia group in Iraq. As we have explained in the past, the Kingdom has diverted millions of barrels of oil per day through pipelines to its Yanbu port on the Red Sea in an effort to minimize the energy shortages due to hostilities near the Persian Gulf that have closed the Strait of Hormuz. 

The pipeline was shut down a day after the Houthi rebels of Yemen increased their control over the crucial Bab al-Mandab Strait (BAM), a narrow body of water separating the Red Sea from the Gulf of Aden. Combined with Iran vastly curtailing shipping through the Strait of Hormuz, this gives Tehran significant control over two of the world’s most crucial passageways for the flow of oil.

“The East-West pipeline, in the regions of Riyadh and Medina, was subjected to several attacks on Thursday morning, September 10, 2026,” Saudi Arabia’s Energy Ministry posted on X. “The line was shut down as a precaution. The attacks resulted in some injuries, and medical care has been provided to those injured.”

“Emergency teams and specialized technical teams began work immediately after the attacks occurred, and took the necessary measures to secure the line and verify its safety, in accordance with approved safety procedures and emergency plans, and in coordination with relevant authorities,” the ministry added. “Any updates will be announced in due course.”

Showing the complexity of this situation and the high degree of coordination among various Iranian-backed proxies, the Saudi Ministry of Foreign Affairs accused Iranian proxies in Iraq of carrying out the attack. The Kingdom subsequently said it would hold off on responding to “give the brotherly Iraqi government an opportunity to take the necessary measures to prevent attacks launched from Iraqi territory against the Kingdom and neighboring countries,” according to the Arab News.

Officials in Baghdad quickly responded to that request, firing a regional commander overseeing operations where the attack was launched from.

“The Prime Minister, the Commander-in-Chief of the Armed Forces, Mr. Ali Falih Al-Zaidi, directed the formation of an investigative committee regarding the Maysan Operations Command,” the Iraqi Prime Minister’s Office announced on X. “His Excellency ordered the dismissal of the Operations Commander from his position, following confirmation that the attacks targeting the brothers in the Kingdom of Saudi Arabia were launched from one of the sites within the province.”

On Friday, the Houthis acknowledged that they captured new stretches of Red Sea coast from the Saudi-backed factions they’ve been battling. This includes the port of Mokha and the key islands of Perim (also known as Mayun) and Zuqar.

In a quick recap of what’s changed, the port provides a potential new surveillance and launching point for the Houthis. From here they can deploy mines, standoff weapons, as well as uncrewed surface vessels (USVs) that can be used to attack shipping. The islands give the Houthis a presence in the middle of shipping lanes. This is especially true for Perim, which sits in the narrowest part of the BAM, less than two miles west of Yemen and about 13 miles east of Djibouti, giving the Houthis a commanding presence at the mouth of the Red Sea. Its position could even allow Houthis to launch attacks on shipping using lower-end munitions, such as anti-tank guided missiles and even rocket artillery.

However, maintaining a major military presence on these islands would be a challenge logistically, especially should the U.S. or its allies attack positions there. You can read more about how the fall of the islands unfolded in our report here.

As they swept through the coastal region, the Houthis captured a treasure trove of U.S.-made Oshkosh M-ATV mine-resistant vehicles, pickup trucks mounted with heavy weapons, artillery pieces, and large quantities of ammunition and small arms abandoned by retreating National Resistance and Giants Brigade forces.

Iran, which has held off on getting the Houthis directly involved during Epic Fury, has now played its hand and is putting the Houthis in a better position to close the strait than ever before. This was always a ‘sum of all fears’ scenario for oil exports from the Middle East and now Iran could put maximum pressure on the United States and the world to end the conflict in their favor, with oil potentially being cut off from both the Red Sea and the Persian Gulf.

Still, on Friday, the Houthis tried to allay those concerns, promising they would limit their control of the BAM to just Saudi vessels. 

“The Yemeni armed forces confirm that maritime navigation is safe for all companies, except for Saudi Arabian ships, which have previously been placed under a ban,” Houthi spokesman Brig. Gen. Yahya Saree proclaimed. “We are continuing to uphold the equation of blockade with blockade, striking enemy Saudi Arabian troop concentrations, and escalating in response to their actions, until the aggression ceases and the blockade is lifted from our dear people.”

Their rationale is that this campaign is all about defending against attacks by the Saudis and their proxies.

The conflict between Saudi Arabia and the Houthis grew out of a civil war in Yemen that erupted in 2014. It expanded a year later when a Saudi-led coalition joined forces with the government ousted by the Houthis and raged on until the parties reached a tenuous ceasefire in 2022. Tensions, however, reignited after that conflict ended when the Houthis joined the U.S.-Iran conflict on the side of their major supporter. In addition to a blockade on Saudi shipping, the Houthis began striking Saudi refineries and other oil infrastructure, including pipelines near the coast.

Houthi assurances about their intentions have meant little in the past. In 2023, when they launched their earlier campaign against Red Sea shipping, the Houthis also claimed a narrow rationale. They said they were doing so on behalf of Palestinians being killed during the Israel-Hamas war. The reality turned out to be that the Houthis were striking even ships not connected to Israel. This ultimately led to the U.S. and allies deploying warships to protect commercial vessels, battles with the rebel group on the water and a campaign of airstrikes on Houthi land targets.

It should be noted that the Saudis held off on getting involved that fight.

Amid all this, the per-barrel price of Brent crude rose to more than $109 yesterday, but was back down to $104 today, according to OilPrice.com.

We have long suggested that the U.S. could get pulled back into a new conflict with the Houthis. Now the rebel group’s rapid defeat of the Saudi-backed forces has reportedly already led to an American role in that fight.

“More than 100 US military advisers are on the ground in Saudi Arabia providing intelligence and targeting support to the Kingdom in its military campaign against the Iran-backed Houthis in Yemen,” CNN reported on Thursday, citing multiple sources familiar with the effort. “The US military personnel are working as part of a newly-established joint forces command, which was formed in recent weeks amid signs Iran was ramping up its own efforts to aid Houthi attacks against Saudi Arabia, one of the sources, a US official, said. That official put the total at roughly 200 troops.”

Still, there are limits on the U.S. role.

“The US is sharing intelligence with Saudi Arabia — as it routinely does already — but it is not participating directly in strikes,” CNN noted. “The US is also not helping refuel Saudi warplanes or providing other operational support, as it has in past fighting with the Houthis.”

Then-Defense Secretary James Mattis ended that in 2018 during the first Trump presidency after growing concerns over the large number of civilian casualties being inflicted. The Saudi coalition’s fight against the Houthis also complicated the U.S. counterterrorism campaign against Al-Qaida in the Arabian Peninsula (AQAP).

CENTCOM commander Adm. Brad Cooper “flew to the kingdom overnight Thursday as Yemen’s Riyadh-backed forces crumbled in the face of a lightning Houthi offensive southward along Yemen’s western coast this week,” Al-Monitor reported. “He was expected to meet with top Saudi officials as they seek to consolidate the battered military effort by forces aligned with Yemen’s government.”

Trump, as we noted at the top of this story, has already declined to intervene kinetically.

“Saudi Crown Prince Mohammed bin Salman (MBS) called President Trump twice Thursday, urging him to launch strikes against the Houthis as the Iran-backed group closed in on a vital Red Sea chokepoint,” Axios reported, citing two U.S. officials. “Trump declined, and U.S. officials stressed the administration has no plans to intervene directly against the Houthis for now.”

Asked if the U.S. would take direct military action against the Houthis, a senior White House official didn’t rule it out but said it is currently relying on regional partners to carry the burden. 

“The United States is focused on protecting our core national security interests—such as ensuring freedom of navigation in the Red Sea—while empowering our regional partners to take the lead in managing and resolving regional security challenges,” the senior official told us. “We are in continuous dialogue with Saudi Arabia and the Republic of Yemen Government regarding regional stability.”

The war against Iran and the ongoing mission to try to protect freedom of navigation in the Strait of Hormuz have already strained the U.S. military. There have been 18 troops killed, more than 800 wounded and wide scale destruction of U.S. bases and equipment. U.S. commanders have warned that the ongoing conflict is unsustainable without deeply degrading America’s ability to respond to other contingencies. How much the U.S. could commit to a fight against the Houthis is an open question, especially if the Iran war spun-up again. During the Red Sea operation, at times two carrier strike groups and many other assets in the air and on the sea, were needed to sustain that operation.

“A second front potentially adds more U.S. military risk as we try to sustain a military that has been involved in a protracted deployment to support our economic pressure-focused strategy,” former CENTCOM commander Joseph Votel told us on Friday. “The U.S. can do just about anything, but it will be a choice that will impact sustainment, create longer-term deployments and impact other national security priorities.”

Contact the author: howard@twz.com 

Russian Foreign Ministry spokesperson Maria Zakharova told a briefing held on August 20, 2026, that “a substantial package of intergovernmental documents and commercial contracts is planned to be signed during the Russia-Africa summit, scheduled for late October.” Given the “mutual interest in stepping up our trade and investment cooperation, we plan to focus the agenda of the upcoming summit meeting on economic matters,” she said.

There, the attendees can discuss in substance a wide range of matters, including boosting Russian-African ties in agriculture, healthcare, education, and scientific-technical and cultural cooperation. “We expect to sign a substantial package of interstate documents and commercial contracts during the event. Well, and we also note, of course, with satisfaction, our partners’ considerable interest in the forthcoming event. Many African capitals have already confirmed their attendance and declared their intention to send representative delegations to Moscow, including heads of state entities and businessmen, of course,” Zakharova explained.

“We have a huge potential in this sphere, which has not yet been fully realized, as everyone admits. Key priorities have also been determined: to cooperate on peaceful uses of nuclear power; to develop independent payment systems, food security, and digitalization, including the adoption of artificial intelligence,” Zakharova underlined.

It is time to face rising realities and the balance of investment power in this 21st century. Whether Russia colonized Africa or never colonized Africa, the most convincing and essential factor is Africa simply has to work with the world’s players. Africa should collaborate with potential foreign investors with adequate funds, in practical terms, ready to invest in its development as exemplified by China. And there is still a growing sense of analytical debates over Russia’s policy approach, though. Ultimately, at least three fundamental assumptions, or appropriately primary principles, can be described as follows:

*Russia’s forthcoming October 2026 The Russia-Africa summit is framed as a chance to consolidate dozens of prior agreements and shift toward concrete economic cooperation in trade, investment, nuclear energy, food security, digitalization, and independent payment systems, yet critics note that rhetoric and signed MoUs have so far produced limited tangible results on the ground.

*Despite historical Soviet-era goodwill and frequent high-level visits, Russia remains a marginal player in African infrastructure, industry, and agriculture compared with China, the EU, and the United States; many announced projects have stalled, financing instruments are weak, and younger Africans see little contemporary economic impact beyond anti-Western messaging.

*Experts and African partners urge Moscow to move beyond nostalgia for past assistance, deliver on existing pledges with real capital and project execution, leverage platforms such as the African Continental Free Trade Area (AfCFTA), and engage Africa’s large youth and middle-class markets if it wishes to convert political alignment into sustained, mutually beneficial economic partnership.

The African Continental Free Trade Area (AfCFTA) provides a unique and valuable platform for businesses to access an integrated African market of over 1.4 billion people. The growing middle class, estimated at 380 (twice the aggregate of Russia’s population), among other factors, constitutes huge market potential in Africa. The African continent, currently, has enormous potential as a huge market, which some experts often refer to as the last business market frontier. Nevertheless, Africa’s trade with the European Union stands at $400 billion, and with China, almost $300 billion. And based on military equipment and weapons and agricultural products such as ice cream, chicken meat, fertilizers, and grain exports, Russia quoted a bilateral trade figure as $27 billion in June 2026.

The world is, increasingly, becoming multipolar. Therefore, Africa’s strength has to be directed at continental development and entrepreneurship, not at building solidarity for geopolitical games. Many African countries are enacting economic reforms; demand is growing for high-quality, competitive products. Russian businesses are interested in this niche, but Russian operators are extremely slow. The ‘snail-pace approach’ reflects their inability to determine financial instruments for supporting trade with Africa and corporate investments in Africa.

There is some level of optimism for a change, though. Russia plans to hold the next Russia-Africa summit in late October 2026. And Sergey Lavrov, minister of foreign affairs of the Russian Federation, indicated in an explicit message mid-July that “in these difficult and crucial times, the strategic partnership with Africa has become a priority of Russia’s foreign policy. Russia highly appreciates the readiness of Africans to further step up economic cooperation.”

At a meeting of the ministry’s collegium, Lavrov strongly suggested the necessity of borrowing a chapter on policy approaches and methods adopted by China in Africa. In fact, Lavrov’s suggestion exposes the inability to play catch-up and, most significantly, Russia’s financial fragility. Lavrov also said, “It is in the interests of our peoples to work together to preserve and expand mutually beneficial trade and investment ties under these new conditions. It is important to facilitate the mutual access of Russian and African economic operators to each other’s markets and encourage their participation in large-scale infrastructure projects. The signed agreements and the results will be consolidated at the forthcoming Russia-Africa summit.”

During the past years, there have been several meetings of various bilateral intergovernmental commissions both in Moscow and in Africa. The first Sochi summit discussed broadly the priorities and further identified opportunities for collaboration. There were 92 agreements signed in Sochi, which totaled RUB 1.004 trillion (equivalent to $12.5 bn), and approximately 240 agreements during the African Leaders Summit held in St. Petersburg, according to official documents. It, however, requires understanding the specific tasks and emerging challenges. The current tasks should concretely focus on taking practical and collaborative actions leading to goal-driven results. Notwithstanding the lapses, Lavrov hopes “the signed agreements and the results will be consolidated at the forthcoming Russia-Africa summit.”

Accentuating the importance of multilateral cooperation between Russia and Africa, Advisor to the President of the Russian Federation Anton Kobyakov said, “The current situation in the world is such that we are witnesses to the formation of new centers of economic growth in Africa. Competition for African markets is growing, accordingly. There is no doubt that Russia’s non-commodity exporters will benefit from cooperating with Africa on manufacturing, technologies, finances, trade, and investment.”

Kobyakov pointed to modern Russia, which already has experience of successful cooperation with African countries under its belt, as ready to make an offer to the African continent that will secure a mutually beneficial partnership and the joint realization of decades of painstaking work carried out by several generations of Soviet and Russian people.

The Soviet Union was quite extensively engaged in Africa, comparatively. Historical documents show that after the Soviet collapse, there were approximately 380 mega-projects across Africa. In the early 1990s, Russia exited, closed a number of diplomatic offices, and abandoned all these, and now there are hardly any signs of Soviet-era infrastructure projects across Africa. And now post-Soviet relations are interestingly engulfed in extensive geopolitics; Russia has only engaged in trading anti-Western slogans on the continent, which also threatens the African Union’s steps to consolidate African unity. 

In addition, Russia has only been criticizing other foreign players during the past two decades without showing any of its own template model of building relationships directed at transforming Africa’s economy. Moreover, Russian officials have underestimated the fact that Russia’s overall economic engagement is largely staggering; various business agreements signed are still not fulfilled with many African countries. Its foreign policy goal is simply to sustain the passion for declarations, signing several MoUs and bilateral agreements with African countries. Grappling with reality, there are equally many investment challenges, including official bureaucracy and the governance system in Africa.

Despite this policy rhetoric and attractive summit outlines, Russia still plays very little role, particularly in Africa’s infrastructure, agriculture, and industry. Investing in agriculture to ensure food security and investing in industry to add value to raw materials in the continent. While, given its global status, it ought to be active in Africa with noticeable corporate investments, similar to policy models of Western Europe, the European Union, the United States, and China, it is all but absent, consistently engages in geopolitical symbolism and rhetoric, and plays a negligible role, according to Professor Gerrit Olivier at the Department of Political Sciences, University of Pretoria, and former South African Ambassador to the Russian Federation.

Now at the crossroads, it could be meandering and longer than expected to make the mark. If existing challenges, obstacles, and impediments are not addressed, Russia’s return journey could take another generation to reach its destination, Africa. If not at the crossroad, then possibly at the periphery of Africa. With the current rapidly changing geopolitical world, Russia has to redefine and reassess policy parameters and adopt a more strategic approach, working with absolute consistency within the principle of finding common solutions to Africa’s development expectations and consolidating its economic sovereignty.

*This is part of the forthcoming book: Putin’s African Dream: Emerging Challenges and Opportunities (Third e-handbook).