BEIRUT (Dispatches) -- Riyadh has suffered significantly as a result of its renewed war on Yemen and Sanaa’s retaliatory strikes, widening the country’s budget deficit and pushing the Saudi economy to the brink of “contraction,” the Wall Street Journal (WSJ) reported Monday. 
“The conflict is jeopardizing Saudi efforts to build travel and tourism into a pillar of the economy, including the international investment conference scheduled for the end of the month that is now increasingly in doubt. The costs of the war have already widened the budget deficit and threaten to push the economy into contraction,” WSJ wrote. 
Saudi Arabia spent heavily over recent years as part of Crown Prince Muhammad bin Salman (MbS)’s modernization efforts, including on plans for the futuristic city of Neom and other high-budget projects.
The fallout of the war on Iran has seriously impacted these plans, particularly with the kingdom’s $350 billion annual budget and the impact of Sanaa’s operations.
WSJ refers to the situation as “impossible to balance.”
Foreign investment has fallen in the first two quarters of 2026 and is running significantly below the MbS’s 2030 target.
“The non-oil side of the country’s economy was smaller in the second quarter than in the first,” WSJ added, citing Capital Economics. 
The Saudi Finance Ministry is now expecting its GDP to fall by 3.6 percent this year. The Ansarallah-led Yemeni Armed Forces (YAF) strikes on the kingdom’s energy sites are also seriously impacting the kingdom.
Military sites and main airports have become prime targets. 
Military costs are rising, and the kingdom’s push to become an AI hub is carrying greater risks due to data centers becoming potential targets, as they have been in other Persian Gulf states. 
Riyadh is also running low on missile interceptors, something analysts warned about at the start of the war in March. The kingdom is “scouring the globe” for air defenses, sources told the newspaper. 
MbS himself is under heavy guard and is constantly moving due to the threat posed by the YAF’s retaliatory operations. 
“[MbS] is shuttling between heavily guarded palaces equipped with bunkers and is guarded by a handpicked security team,” WSJ sources say. The outlet notes that Riyadh has “miscalculated” the YAF’s capabilities. 
Over the weekend, Riyadh’s international airport came under heavy Yemeni bombardment. The halt to operations at King Khalid Airport was extended on Monday. 
“The suspension of operational activities at King Khalid International Airport in Riyadh has been extended in order to complete the necessary procedures to verify the safety of the airport facilities and their operational readiness,” aviation authorities said. 
Sana’a had repeatedly issued warnings over recent days, but Saudi authorities insisted on keeping airports running. The kingdom’s Abha International Airport has also been under fire. 
Major Aramco sites across the country have been repeatedly struck, including refineries. 
Saudi Aramco CEO Amin Nasser has warned that pressure on global energy supplies will intensify until the Strait of Hormuz fully reopens, describing the global squeeze on crude oil as “serious” during the WPC Energy Congress in Riyadh.