Saudi Arabia Cuts Western Consultant Contracts
Saudi Arabia has stopped issuing new contracts to western consultants and delayed payments on existing ones, according to the Financial Times, even as the kingdom’s oil export revenues reached their highest level in more than three years. The freeze came after the outbreak of the US-Israeli war on Iran, though officials and executives say the decision reflects pressures that had been building long before the conflict began. Riyadh has denied halting payments altogether.
The Financial Times reported on Thursday that the contract halt followed the eruption of the US-Israeli war on Iran. One executive told the paper that invoices already submitted by western firms had been deferred until the end of the second quarter — the end of June 2026.
Saudi Arabia’s denial was unambiguous. The government disputed the characterisation that payments had stopped, though it did not address the freeze on new contract issuance.
Oil Revenue at a Three-Year High
The timing is striking. According to Saudi Arabia’s General Authority for Statistics, the kingdom’s revenue from oil exports surged to $24.7 billion in March 2026 — the highest monthly figure since October 2022. Rising crude and refined product prices, driven largely by the regional conflict, were the primary cause.
Saudi Arabia has managed to keep oil flowing where others in the Gulf cannot. The Strait of Hormuz — the narrow waterway through which roughly a fifth of global oil passes — is effectively closed by competing US and Iranian blockades. Most Gulf producers have been unable to capitalise on elevated prices as a result.
Riyadh’s advantage lies in infrastructure built decades ago. Its East-West Pipeline connects oil fields on the Gulf coast to the Red Sea port of Yanbu, allowing the kingdom to bypass the Strait entirely. As a result, Saudi Arabia is exporting at around 70 percent of its pre-war levels while Brent crude, the international benchmark, is trading at roughly 50 percent above pre-war prices — a combination that has sharply boosted revenues.
The UAE holds a similar bypass route via a pipeline through Fujairah and Oman to the Arabian Sea. Most other Gulf states have no such alternative.
A Deficit Despite the Windfall
The revenue surge has not translated into fiscal balance. Saudi Arabia recorded a government deficit of $33.5 billion in the first quarter of 2026. Total government spending rose 20 percent year-on-year, with military expenditure climbing 26 percent as the kingdom responded to Iranian missile and drone attacks.
Saudi Arabia says the spending increase was necessary to support the broader economy during the conflict. The combination of a war premium on oil and a double-digit rise in spending has produced a situation where revenues are historically strong yet the budget remains in the red.
Mohammed al-Jadaan, Saudi Arabia’s Minister of Finance, signalled the direction of travel in December 2025. “We have no ego,” he said, in reference to the kingdom’s willingness to reconsider and scale back projects that were no longer financially viable.
Vision 2030’s Diminishing Returns
The freeze on consultancy work sits within a longer-running reassessment of Saudi Arabia’s megaproject ambitions. Western consultants — including major firms such as McKinsey and Boston Consulting Group — flooded into the kingdom after Crown Prince Mohammed bin Salman launched Vision 2030 in 2016. The programme promised an economic transformation away from oil dependency, built around enormous infrastructure, tourism, and urban development projects.
The flagship project, Neom — a futuristic development in the northwest of the country that was to include The Line, a planned 170-kilometre straight-line city, and a mountain resort with artificial snow — has effectively stalled. The project was omitted entirely from Saudi Arabia’s 2026 pre-budget statement, according to Middle East Eye. As early as July 2025, the kingdom was weighing staff cuts at Neom.
In the months since, Saudi Arabia has pivoted its investment focus toward logistics, mining, technology, and artificial intelligence — sectors that rely less on the armies of western planners, urban designers, and strategy consultants who built their practices around Vision 2030.
A Cultural Fracture
The relationship between western consultants and their Saudi clients was not always smooth. Wayne Borg, who headed Neom’s media division, became a symbol of the dysfunction. According to Middle East Eye, Borg was known internally for tirades in which he disparaged Islam, made lewd remarks, and described women from the Arabian Gulf in offensive terms. His conduct, reported inside a project that was meant to showcase Saudi modernity, reinforced Saudi frustrations with certain foreign executives who treated the engagement as a personal opportunity rather than a national mission.
Such episodes fed a broader institutional impatience with the western consultancy model — one that pre-dated the Iran war and added internal political weight to the financial arguments for scaling back.
Regional and Global Impact
For western professional services firms, Saudi Arabia had become one of the most lucrative single-country clients in the world. Billions of dollars in fees flowed to consultants, architects, engineers, and planners over the decade since Vision 2030 launched. A sustained freeze on new contracts removes a significant revenue stream from firms that had built dedicated Gulf practices to service Riyadh’s ambitions.
The shift also signals that Saudi Arabia intends to consolidate spending around a narrower set of priorities — sectors where domestic capability is easier to build and where dependency on foreign expertise is more easily reduced over time. Whether the freeze is a war-related pause or the beginning of a permanent recalibration remains the central question for firms still holding unpaid invoices.
Background
Saudi Arabia has been a significant employer of western consultants since the 1950s, when the kingdom began monetising its oil reserves with foreign technical assistance. The scale of that engagement multiplied after 2016, when Vision 2030 created demand for expertise in urban planning, tourism development, governance reform, and financial services. The US-Israeli war on Iran, which disrupted Strait of Hormuz shipping routes and reshaped Gulf economics, began in 2026. Saudi Arabia increased military spending by 26 percent in the first quarter of the year in response to Iranian missile and drone attacks on the kingdom.
What Happens Next
Saudi Arabia has set the end of June 2026 as the point at which deferred invoices from existing consultancy contracts are scheduled to be paid, according to one executive who spoke to the Financial Times. The kingdom has not announced any timeline for resuming new contract issuance. Firms with active engagements will be watching the second-quarter budget picture closely when Saudi authorities release updated fiscal data. Mohammed al-Jadaan is expected to make further statements on government spending priorities as the war’s economic impact on the kingdom becomes clearer. Saudi Arabia’s pivot toward logistics, mining, and AI suggests future consultancy opportunities will look structurally different from those tied to Vision 2030’s megaprojects.
