Saudi Oil Sector Set for Strong 2027 Rebound

Saudi Arabia's oil sector is poised for a strong recovery next year as export routes gradually normalise and crude production returns to pre-disruption levels, according to Riyad Capital, which forecasts oil-sector growth of 14.3% in 2027.

The investment bank said its baseline scenario assumes a gradual reopening of oil export routes beginning in September 2026, with Saudi crude production recovering to earlier levels by the same month following disruptions linked to tensions in and around the Strait of Hormuz.

The anticipated normalisation is expected to pave the way for a significant rebound in the Kingdom's hydrocarbons sector after a challenging 2026.

Riyad Capital forecasts oil activities will contract by 3.6% this year before surging 14.3% in 2027 as production recovers and export flows stabilise.

The sharp turnaround would make the oil sector the principal driver of Saudi Arabia's economic expansion next year.

Saudi crude production is projected to average 9.1 million barrels per day in 2026 before rising to 10.4 million barrels per day in 2027, according to the firm's latest Saudi Economic Chartbook. The increase of more than one million barrels a day would represent a major boost to economic activity and government revenues.

Despite the anticipated recovery in output, Riyad Capital expects oil prices to moderate next year. Brent crude is forecast to average US$75 a barrel in 2027, down from an estimated US$86 a barrel in 2026. West Texas Intermediate crude is projected at US$70 a barrel next year compared with US$79 a barrel this year, while the OPEC basket price is also expected to decline to US$75 a barrel from US$86.

The outlook suggests that higher production volumes, rather than stronger prices, will be the primary factor supporting the Kingdom's oil sector and overall economic performance in 2027.

The projected rebound in hydrocarbons activity is expected to have a significant impact on the wider economy. Riyad Capital forecasts Saudi Arabia's overall GDP growth will accelerate to 6.8% in 2027 from just 0.9% in 2026, with the oil sector accounting for much of the improvement. Non-oil activities are also expected to remain supportive, expanding by 4.7% in 2027 after growing 3.0% in 2026.

The recovery in oil production is also expected to strengthen the Kingdom's external position. Saudi Arabia is forecast to post a trade surplus of SAR410 billion in 2027, equivalent to 7.6% of GDP, following a surplus of SAR455 billion in 2026.