Saudi Arabia has suspended fresh contracts for Western consultancies operating in the country and delayed some payments as the government deals with a growing deficit and the fallout from its ally, the United States’ war with Iran and the wider West Asia crisis, a new report said.
The nearly three-month-long US-Israeli conflict against Iran disrupted shipping routes through the Strait of Hormuz, pushing up energy prices. It also put pressure on global supply chains and led to shortages of several goods.
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Saudi stops new work for consultants: Report
Several executives at consulting companies told UK newspaper Financial Times that Riyadh made the decision after the conflict began, as concerns grew over the kingdom’’s oil income and after Iran launched drones and missiles at Arab countries in the region.
The reported decision also points to Saudi Arabia stepping up efforts to control government spending and investments that had expanded under Crown Prince Mohammed bin Salman’s Vision 2030 plan.
Notably, the Vision 2030 programme is aimed at reducing reliance on oil, supporting citizens, attracting local and foreign investment, and positioning the country as a major global player.
Which firms are affected?
Although executives said they believed projects would continue, the delays have raised concerns within the kingdom about the roles of consulting firms such as McKinsey, Boston Consulting Group, and the Big Four accounting and advisory companies.
These firms have built significant operations across West Asia. Saudi Arabia, in particular, became a major source of business after launching its large-scale transformation drive around a decade ago.
Speaking to the publication, an executive said, “They haven’t put it out formally, but everyone knows, and everyone is operating on this basis…They are saying we are not paying you any time soon, until July.”
Another executive said “decisions” regarding new agreements and invoice payments had been pushed back until the end of the second quarter.
Executives also said the conflict had given Saudi Arabia more reasons to reduce spending, as the country was expected to increase defence spending and invest more in Red Sea infrastructure due to Iran’s ability to block the Strait of Hormuz.
What did Saudi say on the report?
Saudi Arabia’s finance ministry said it “and the Saudi government have always looked to ensure all investments, including consultancy services, provide clear returns in line with the strategic objectives of Vision 2030”.
The ministry rejected claims that payments had been delayed and said that in 2026, “99.5 per cent” of invoices had been “paid within the contractual timeframe”, the report said.
During the conflict, the kingdom was partly protected because it could redirect nearly two-thirds of its crude oil exports from the Gulf to ports on the Red Sea coast, while global oil prices also moved higher.
Notably, there has been growing dissatisfaction within the country for years over the amount of money being spent on consultants. Over the past two years, Riyadh has also reshaped spending priorities and worked to control rising deficits, according to the UK daily.
West Asia crisis
Talks between Iran and the US continue to remain at a standstill despite a fragile ceasefire.
As a result, tensions across West Asia remain high, as fears grow that the region could again slide into direct conflict and deepen the global energy crisis caused by the war.
Iran effectively shut the Strait of Hormuz in response to US and Israeli attacks that sparked the conflict on February 28. Most fighting stopped after a ceasefire in April, but although Iran has restricted movement through Hormuz, the US has imposed a blockade along its coastline.
Ties between Iran and Arab countries in the region, including Saudi Arabia and the United Arab Emirates, have been severely strained since the conflict began. Tehran launched missile and drone attacks on Gulf nations in response to US-Israeli strikes.
Iran has repeatedly claimed that Gulf countries allowed US forces to launch attacks from their territories.
However, Gulf nations have repeatedly rejected these allegations, saying even before the conflict began that they would not allow their land or airspace to be used for attacks on Iran.
With inputs from agencies
