Against the backdrop of heightened regional volatility sparked by the US-Israeli war on Iran, Saudi Arabia has implemented a halt on new contracts for Western consultancy firms, with some payments to existing service providers delayed, according to an exclusive report from the Financial Times published Thursday.
One anonymous senior executive briefed on the policy told the outlet that scheduled payments on outstanding existing invoices have been pushed back to the end of June, the close of Saudi Arabia’s second fiscal quarter. Officials from the Saudi government have denied that any broad suspension of payments is in place.
While many industry observers have linked the policy shift directly to regional instability stemming from the ongoing war, deeper structural factors underpin Saudi Arabia’s new hesitancy to engage Western consulting firms, according to sector analysts.
Paradoxically, the conflict has delivered a major financial boost to Riyadh: data from the kingdom’s General Authority for Statistics shows that March oil export revenues hit $24.7 billion, the highest level recorded in more than three years, driven by sharp global price increases for crude and refined oil products spurred by war-related supply chain disruptions. That marked the highest monthly revenue figure for Saudi oil exports since October 2022.
Unlike most other Gulf oil producers, Saudi Arabia has been able to capitalize on rising prices despite the effective closure of the Strait of Hormuz, the world’s busiest oil chokepoint, due to overlapping US and Iranian blockades. Most regional nations, with the lone exception of the United Arab Emirates which operates a small alternative pipeline through Fujairah and Oman, lack infrastructure to bypass the strait. Saudi Arabia’s domestic East-West Pipeline connects its Persian Gulf production fields directly to the Red Sea export terminal of Yanbu, allowing the kingdom to maintain exports at roughly 70% of pre-war levels, even as the international Brent benchmark trades 50% above pre-war prices.
Despite this windfall from elevated oil prices, the kingdom still faces a widening fiscal deficit, with government outpacing growing far faster than incoming revenue. Preliminary first-quarter fiscal data shows a $33.5 billion deficit for the first three months of the year, as total public spending jumped 20% year-over-year. Riyadh has attributed the spending increase to broad economic stimulus measures, alongside a 26% jump in military outlays prompted by increased regional threats, including Iranian missile and drone attacks on Saudi territory.
The pause on new Western consulting contracts also aligns with a broader strategic pivot in Saudi Arabia’s long-term development plans that predates the current conflict. In recent months, the kingdom has dramatically scaled back the massive, high-profile megaprojects that defined the early phase of Crown Prince Mohammed bin Salman’s Vision 2030 reform initiative – projects that relied heavily on expertise from top Western consultancy firms. Riyadh has instead shifted its focus toward more targeted investments in logistics, mining, technology and artificial intelligence. Most notably, the kingdom’s flagship $500 billion Neom megaproject was entirely excluded from the 2026 pre-budget policy statement released by the government.
Western consulting firms have operated in Saudi Arabia since the 1950s, but saw explosive growth in new contracts after Vision 2030 launched in 2016, leading firms such as McKinsey & Company and the Boston Consulting Group to heavily expand their footprint in the kingdom. Western consultants took the lead on planning and developing Neom, a project that envisioned a 170-kilometer car-free linear city called The Line and an artificial snow ski resort in the middle of the Arabian desert.
However, even before the outbreak of the US-Israeli war on Iran, Riyadh had begun rolling back these ambitious megaprojects, as officials confronted their unsustainable price tags and weaker-than-expected interest from international private investors. As early as July 2025, Saudi officials were already discussing widespread staff cuts at Neom. Addressing this trend in December, Saudi Finance Minister Mohammed al-Jadaan said the kingdom had “no ego” that would stop it from reassessing and refocusing major projects to align with fiscal reality.
Compounding tensions with Western firms have been reported cultural frictions at high-profile projects like Neom. Multiple reports have documented instances of Western executives at the project making derogatory comments about their Saudi colleagues and local culture. Most notably, Wayne Borg, the former head of Neom’s media division, gained notoriety for aggressive outbursts that included disparaging remarks about Islam, lewd sexual comments, and derogatory statements describing Gulf Arab women as “transvestites”, according to on-the-record accounts from former colleagues.