After the restoration of relations between Saudi Arabia and Iran.. Is the economy affected?

Before 2016, the Kingdom of Saudi Arabia's exports to Iran amounted to about $308 million.. What after the resumption of diplomatic relations under the auspices of China?

  Friday, March 10, 2023, China sponsored the restoration of diplomatic relations between Saudi Arabia and Iran, after nearly 7 years of boycott.

It is scheduled to resume diplomatic relations between Saudi Arabia and Iran within two months from now, and this is expected to affect the trade exchange movement, which was almost stopped between the two countries, in addition to major changes in the oil market.

An opportunity to increase Saudi exports

With the restoration of relations, Riyadh and Tehran agreed to activate the security cooperation agreement between them signed in 2001, as well as the general agreement for cooperation in the field of economy, trade, investment, technology, science, culture, sports and youth, signed in 1998.

Saudi exports

Before 2016, Saudi exports to Iran amounted to about 308 million US dollars, and imports from Iran to the Kingdom recorded 202 million dollars, before they fell to very low levels with the severance of diplomatic relations.

A spokesman for the Iranian Customs Authority, Ruhollah Latifi, stated that the value of Iranian goods purchased by Saudi Arabia at the end of 2021 does not exceed $39,000, and Iranian exports to the Gulf countries exceeded $8.8 billion during 2022.

An expected drop in oil prices

according to Al Arabiya channel, after the restoration of relations between Saudi Arabia and Iran, it is expected that the supply of oil will increase, which will lower its prices, bearing in mind that Iran is excluded from the current “OPEC Plus” agreement to limit oil supplies, and it is likely that it will remain exempt from increasing production at first.

$115 billion

  “OPEC” approved, during its meeting last December, to reduce production by about two million barrels until the end of this year. Iran expected oil exports for the 12 months ending in March to reach approximately $115 billion.

An increase in Iranian oil production

Iranian Oil Minister Javad Oji said that his country's production of crude oil has reached the level before the US sanctions imposed on Iranian entities, noting that the current capacity of Iranian oil production exceeds 3.8 million barrels per day.