Saudi Arabia’s ambitions beyond oil and its regional security test
By Dr. James E. Sulton Jr.
JA International Correspondent
For most of a century, oil has defined the Saudi Arabian economy. Then in 2016, Crown Prince Muhammed bin Salman launched Vision 2030 to end that dependency by building an economy driven by private enterprise, tourism, advanced industry, and technology.
Ten years later, that visionary plan faces its hardest test. A regional war, initiated by the American and Israeli strikes on Iran in February 2026, has penetrated the kingdom’s airports, pipelines, and capital.
Progress is real. Non-oil related activity now comprises 55 percent of Saudi GDP for the first time, compared with 45.4 percent in 2016. Reports are that unemployment has fallen from 12.3 percent to about 7 percent, and women’s labor force participation has risen from roughly 20 percent to more than 34 percent.
Technology is the newest pillar. HUMAIN, the artificial intelligence company created by the Public Investment Fund (PIF), is targeting 6 gigawatts of data-center capacity by 2034, and AI computing infrastructure built with AMD and Cisco is now serving customers in the kingdom. The reasoning is that cheap energy, open land, and capital can make computing power the kingdom’s next strategic commodity.
The flagship projects, however, have been cut back. The PIF governor said in April that The Line, NEOM’s planned 100-mile city, is no longer a priority, and the completion date for Riyadh’s New Murabba district has been pushed from 2030 to 2040. The fund’s new strategy puts 80 percent of its capital into the domestic economy and favors projects with clearer returns. This discipline is sensible, but it highlights a weakness: the effort to transcend oil production is still paid for by oil and directed by the state.
When Iran restricted shipping through the Strait of Hormuz, Riyadh moved its crude oil onto the East-West Pipeline to the Red Sea. By June, most Saudi exports were leaving from its west coast.
In July, after a U.S.–Iran ceasefire collapsed, the Houthis declared a “maritime embargo” and began attacking Saudi airports, oil facilities, and tankers. That ended the informal truce in place since 2022. In September, an attack blamed on Iran-aligned fighters in Iraq knocked out the East-West Pipeline.
The conflict has now reached the capital. On October 10, a strike on Riyadh’s King Khalid International Airport killed at least 12 people and wounded about 300. This was the deadliest attack on the kingdom in more than a decade. In return, Saudi Arabia is running an air campaign in Yemen. The Houthis cite more than 2,000 Saudi airstrikes as their justification.
The Houthis act as Iran’s ally, but analysts describe them as an autonomous force with its own weapons supply chain. Riyadh is not formally at war with Tehran. The two governments restored relations in 2023, and Iran’s foreign minister offered to help facilitate Saudi–Houthi talks. The kingdom is fighting Iran’s most capable ally while keeping a channel open to Iran.
The Iranian war magnifies the difference between Saudi Arabia having a diversified economy and a diversified treasury. The Finance Ministry now expects real GDP to shrink 3.6 percent in 2026, compared with the 4.6 percent growth it had budgeted, even as non-oil activity grows. The first-half deficit reached about $42.7 billion, financed by borrowing. Exports recovered in September, but a windfall that depends on the course of a war is not a development strategy.
The sectors Vision 2030 has worked hardest to build are the most vulnerable. A former IMF mission chief warns the airport attacks will hurt the economy, “particularly the developing tourism sector,” and discourage foreign investors. Investors placing billions of dollars of AI hardware must weigh the risk of physical attack alongside the price of power.
There is no sign of an internal challenge to the monarchy. The state has shown it can borrow, reroute exports, and keep functioning. The harder question is whether it can offer the security long-term capital, global talent, and tourists require. Vision 2030 assumed Saudi Arabia could turn away from regional rivalry toward commerce. The events of 2026 have severely tested that assumption.
Three things will decide what comes next: a durable arrangement over Hormuz, a political settlement in Yemen, and the ability of a leaner Vision 2030 to keep attracting private investment while the danger remains.
Saudi Arabia has shown its economy can change. Its post-oil future may depend less on the towers it builds or the chips it buys than on securing a regional peace that lets those investments pay off.
