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

Saudi Arabia is facing tighter liquidity as slower bank deposit growth and a weakening economy put pressure on its financial system. A Bank of America report cited by Bloomberg links the strain to liquidity problems in the UAE, Saudi Arabia’s close banking ties with its neighbour, and withdrawals by government entities, even as demand for loans remains high.

The pressure comes despite oil output rising to 10.6 million barrels per day in October, from 8.372 million in September, its highest level since February. Saudi Arabia’s dollar peg limits its ability to inject liquidity independently of US monetary policy; meanwhile, the East-West Pipeline has helped it bypass disruption in the Strait of Hormuz but has faced attacks, including a reported strike on Monday.