The Kingdom Keeps Its Books, Not Its Straits

The Promise in the Crosshairs

Riyadh’s international airport is closed until October 17 following the Houthi attacks over the weekend of October 10–11.

The choice of target is no accident: King Khalid is the gateway to Riyadh, the city that embodies Saudi modernisation, from the headquarters of the Public Investment Fund to the towers of the financial district.

The message is clear: Saudi modernity can be struck at home.

Every missile aimed at a terminal, every drone targeting a pipeline, every threat against a tanker forces the Kingdom to spend more to defend more — without ever guaranteeing invulnerability.

A war of fiscal attrition, in short, disguised as a missile war.

Protection Up for Negotiation

In 1945, the meeting aboard the USS Quincy symbolised a relationship in which Saudi oil and American power would long find common ground. A strategic relationship offers no insurance against every attack: having the means to intervene and agreeing to do so are two different decisions.

Riyadh must therefore now factor this gap into its calculations. American protection can no longer be taken for granted as the foundation of its entire security: its scope, terms and timing are up for negotiation.

Consequently, the Kingdom is outsourcing part of its air and maritime security. An army designed to remain under the dynasty’s control is not necessarily an army designed to project power.

Against an asymmetric adversary favouring drones, ballistic missiles and threats to shipping, Saudi material superiority is far from translating into strategic superiority.

From Yanbu, ships can indeed still sail north towards Suez or Egypt’s SUMED pipeline. To reach Asia from there while avoiding Bab el-Mandeb, however, the detour becomes considerable, tying up ships, delaying deliveries and increasing transport costs.

Oil can therefore keep flowing out while the bill rises. It is simply that attrition begins long before strangulation.

The Budget Tested by Time

If the Kingdom no longer controls its straits, it must still balance its books — and the figures do not look good.

Saudi Arabia’s pre-budget statement projects growth of 12.8% in 2027, following an estimated contraction of 3.6% in 2026. Yet a return to normal maritime traffic has become a prerequisite for delivering on the budget’s promise, because Yanbu is no ordinary port: it is the western terminus of the East–West pipeline and the artery that allows Saudi crude to bypass Hormuz. While the latter was under strain, Yanbu served as the Kingdom’s safety valve.

While the closure of Bab el-Mandeb forces ships to take detours, a strike that shuts down Yanbu or its pipeline directly hits export capacity. In the first case, the Kingdom pays more to sell. In the second, it risks selling less.

Higher oil prices can cushion part of the shock, although a more expensive barrel offsets lower volumes only if the additional revenues also cover the new expenditure.

Every extension of the conflict forces a choice between protecting the present and building the future. Projects can be postponed, borrowing increased, priorities revised. But beware: a national transformation announced with a fixed deadline can ill afford to have a war dictate its timetable.

A higher risk premium can — and will — weigh on projects long after the last strike. Military costs end with the fighting — when and if it stops. The financial costs will outlive it.

The question, in other words, is no longer whether Riyadh can win this war, but how long it can afford not to lose it.