Saudi Arabia faces liquidity crunch even as oil exports rebound to pre-war levels

Saudi Arabia is feeling the pinch of a liquidity crisis as bank deposits slow and the economy comes under pressure from the US-Israeli war on Iran, a new report from Bank of America says.

In a note to clients, Bank of America said Saudi Arabia is grappling with “contagion” caused by liquidity tightness in the UAE and a rapid slowdown in the kingdom’s own economy, according to an article published on Bloomberg on Tuesday.

The report said Saudi banks are feeling the pain in the UAE, which is also grappling with fallout from the Iran war and tighter liquidity. Saudi banks are closely linked to their Emirati neighbours, with a high number of interbank transactions contributing to deposits at Saudi banks.