Riyadh takes the diplomatic initiative
2 April 2025
Saudi Arabia has been at the centre of regional diplomatic activity through the early months of 2025, positioning itself as an intermediary in the Ukraine conflict and at the forefront of engagement with the new regime in Syria.
The role of regional mediator is one that has in recent years been more closely associated with Qatar – particularly in relation to the Gaza conflict – and, on occasion, Oman.
Riyadh’s decision to throw its weight behind diplomatic initiatives is part of what Abdulaziz Sager, chairman of the Saudi-based Gulf Research Centre, has described as a “bold multi-alignment strategy”, which seeks to balance Riyadh’s economic and security concerns and its regional leadership ambitions.
Multipronged initiatives
The kingdom has gained plaudits for its efforts to resolve the Ukraine war in particular. Following his talks with Crown Prince Mohammed Bin Salman (MBS) in Jeddah on 11 March, Ukraine’s President Volodymyr Zelenskyy said: “Saudi Arabia provides a crucial platform for diplomacy, and we appreciate this.”
Zelenskyy added that he had “a detailed discussion on the steps and conditions needed to end the war” with the crown prince.
The previous month, US secretary of state Marco Rubio had said Saudi Arabia had played an “indispensable role” in setting up bilateral negotiations between Moscow and Washington to discuss the conflict.
Russia’s President Vladamir Putin has also praised the Saudi leadership for providing a platform for high-level meetings with the US and “creating a very friendly atmosphere”.
Whether all this leads to a lasting peace deal for Ukraine remains to be seen, but Saudi Arabia’s attitude to conflict may be coloured somewhat by its own experiences over the past decade in Yemen.
It is now 10 years since it launched a bombing campaign against Yemen’s Houthi rebels in March 2015, and the war has not gone as Riyadh had hoped, with the Houthis proving far more resilient than anticipated.
Saudi Arabia’s southern border has at least been relatively quiet since a truce took hold in 2022, but a comprehensive peace deal has proved elusive.
Riyadh has also been re-engaging in the Levant this year, in light of the new regime in Damascus.
The new Syrian president Ahmed Al-Sharaa travelled to Riyadh in early February, on his first trip abroad since taking power. Saudi Foreign Minister Prince Faisal Bin Farhan had been in Damascus a week earlier.
There are some key issues at stake for Riyadh. The regime of President Bashar Al-Assad had overseen the industrial-scale production of the amphetamine-type stimulant Captagon, much of which was smuggled into Saudi Arabia and other Gulf states. Saudi efforts to disrupt the trade – both at its borders and via lobbying of the Syrian authorities – had failed to stem the flow of drugs.
In addition, Hasan Alhasan, senior fellow for Middle East Policy at the International Institute for Strategic Studies, has pointed out that between 500,000 and 2.5 million de facto Syrian refugees are thought to be living in Saudi Arabia – a fact that gives Riyadh a clear interest in Syria’s stability, particularly if it wants to encourage them to return home.
“Saudi Arabia views the fall of the Assad regime as an opportunity to reassert its influence in the Levant,” he asserted in a recent commentary.
The ousting of Assad in late 2024 and the recent Israeli campaign against Hezbollah has also changed the situation on the ground in Lebanon, encouraging Saudi Arabia to reconsider its approach there too.
MBS hosted Lebanon’s recently elected President Joseph Aoun on 3 March. Following their meeting, Saudi Arabia said it would look again at allowing Lebanese exports to Saudi Arabia and letting its own citizens travel to Lebanon.
Manoeuvring around Trump
The Saudi diplomatic push may also be motivated by a desire to ensure that relations with Washington remain on a positive footing in the wake of Donald Trump’s re-election as US president.
At first, it appeared that the bilateral relations would follow a similar pattern to Trump’s first term.
In January, MBS said in a phone call with Trump that Saudi Arabia was planning to invest some $600bn in the US over the coming four years, which the US president suggested should probably be increased to $1tn. This echoed the signing of $460bn-worth of defence deals when Trump made Saudi Arabia his first foreign trip as president in May 2017.
Riyadh appears to have conceded to Trump’s higher figure, with the US president saying in early March: “I said I'll go if you pay $1tn to American companies, meaning the purchase over a four-year period of $1tn, and they've agreed to do that. So, I'm going to be going there.”
However, other aspects of the bilateral relationship are more difficult and less predictable. Trump had been pushing Saudi Arabia to join Bahrain, the UAE and Morocco in normalising relations with Israel, but in light of the war in Gaza and Trump’s own plans for the ethnic cleansing of Palestinians from the strip, that looks like a stretch too far.
Trump will nevertheless have been pleased by the decision by Saudi Arabia and the other members of the Opec+ bloc in early March to unwind some of the production restrictions they had voluntarily agreed.
From April onwards, the eight-strong group will start to bring 2.2 million barrels a day back onto the market over the course of 18 months. That fits in with Trump’s call in January, soon after taking office, for Riyadh and Opec to do more to help bring oil prices down.
However, that decision may also create fiscal challenges for the Saudi government, as any rise in production could be more than offset by lower prices.
Saudi Aramco has announced plans to trim its dividend payouts this year to $85.4bn – down from $124bn in 2024. These payments are a vital source of revenues both for the central government and for its Public Investment Fund (which holds a 16% stake in Aramco)
All that could force some public sector spending constraint in the kingdom, in a sign that balancing diplomacy and financial interests is not always straightforward.
MEED’s April 2025 report on Saudi Arabia includes:
> UPSTREAM: Saudi oil and gas spending to surpass 2024 level
> DOWNSTREAM: Aramco’s recalibrated chemical goals reflect realism
> POWER: Saudi power sector enters busiest year
> WATER: Saudi water contracts set another annual record
> CONSTRUCTION: Reprioritisation underpins Saudi construction
> TRANSPORT: Riyadh pushes ahead with infrastructure development
> BANKING: Saudi banks work to keep pace with credit expansion
Register for MEED's guest program now to access this article.
Exclusive from Meed
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Oman’s Barka 5 IWP solar plant begins full operations1 May 2026
Spain’s GS Inima has begun permanent operations at the solar photovoltaic (PV) plant serving the Barka 5 independent water project (IWP) in Oman.
The solar facility is the third of its kind in Oman to power a large-scale desalination facility through a self-supply model.
In a statement, GS Inima said it will provide up to 50% of the desalination plant’s electricity needs during daytime operations, improving efficiency and reducing reliance on external power sources.
The PV plant has an installed capacity of 6.5MWp. It is designed to optimise energy consumption at the adjacent reverse osmosis desalination facility.
The project was developed by GS Inima in collaboration with local firm Nafath Renewable Energy as the engineering, procurement and construction (EPC) contractor. China-based OCA Global provided owner’s engineering services.
The Barka 5 IWP has a desalination capacity of approximately 100,000 cubic metres a day.
GS Inima won the contract to develop the Barka 5 IWP project in November 2020. As previously reported, financial close was reached in 2022, and construction of the facility was completed in 2024.
The self-supply solar PV plant is equipped with 10,504 bifacial modules supplied by China’s Jinko Solar. These are mounted on fixed structures provided by Mibet Energy.
Power is managed through 18 Sungrow inverters with a total capacity of 320kWac each, while electricity is fed into the desalination plant through an 11kV connection.
The integration of solar power supports the efficiency of the Barka 5 facility, which has an energy consumption rate of 2.7kWh per cubic metre.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16645971/main.jpg -
Qiddiya receives high-speed rail PPP prequalifications1 May 2026
Register for MEED’s 14-day trial access
Saudi Arabia’s Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company (QIC) and the National Centre for Privatisation & PPP, received prequalification statements from firms on 30 April for the public-private partnership (PPP) package of the Qiddiya high-speed rail project in Riyadh.
This follows the submission of prequalification statements for the engineering, procurement, construction and financing (EPCF) package on 16 April, as reported by MEED.
The prequalification notice was issued on 19 January, and a project briefing session was held on 23 February at Qiddiya Entertainment City.
The Qiddiya high-speed rail project, also known as Q-Express, will connect King Salman International airport and the King Abdullah Financial District (KAFD) with Qiddiya City. The line will operate at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.
The line is expected to be developed in two phases. The first phase will connect Qiddiya with KAFD and King Khalid International airport.
The second phase will start from a development known as the North Pole and travel to the New Murabba development, King Salman Park, central Riyadh and Industrial City in the south of the city.
In November last year, MEED reported that more than 145 local and international companies had expressed interest in developing the project, including 68 contracting companies, 23 design and project management consultants, 16 investment firms, 12 rail operators, 10 rolling stock providers and 16 other services firms.
In November 2023, MEED reported that French consultant Egis had been appointed as the technical adviser for the project. UK-based consultancy Ernst & Young is acting as the transaction adviser, and Ashurst is the legal adviser.
Qiddiya is one of Saudi Arabia’s five official gigaprojects and covers a total area of 376 square kilometres (sq km), with 223 sq km of developed land.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16641057/main.gif -
Bid deadline extensions hint at tighter project market1 May 2026
Commentary
Mark Dowdall
Power & water editorThere has been a steady run of bid deadline extensions across major power and water projects in recent weeks.
The latest is the Al-Dibdibah and Al-Shagaya solar independent power producer (IPP) plant in Kuwait, where the submission date has been moved again to 31 May, following an earlier shift from February to the end of April. Similarly, bidding for the first phase of the Al-Khairan IWPP has also been extended.
In Bahrain, bidding for the 1.2GW Sitra IWPP has been pushed back by another month to 17 May, having already been under main contract tender since last August.
Meanwhile, in Dubai, contractors have been given additional time to submit bids for both the Jebel Ali sewage treatment plant expansion and a dams rehabilitation project in Hatta.
Individually, these shifts are not unusual, and extensions are a routine part of the procurement cycle, especially with large, capital-intensive schemes.
However, amid regional tensions and increasingly complex risk profiles, stakeholders are having to weigh up how much they can absorb, whether that is performance guarantees, financing exposure or delivery risk.
For contractors and developers, this could mean looking more closely at supply chains, insurance costs and the potential for disruption. Lenders, too, are likely taking a more measured view on long-term exposure.
This caution can show up in the bid process. More internal approvals, more conservative pricing, and in some cases, perhaps a hesitation to commit altogether.
At the same time, strong pipelines across the GCC mean contractors are not short of work. Firms can afford to be selective, focusing on projects where risk and return are better aligned.
Clients, in turn, face a choice. Push ahead with more limited competition or extend and try to draw in stronger participation. Most appear to be opting for the latter.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16640998/main.jpg -
Saudi Arabia launches $2bn Jawharat Al-Arous project1 May 2026
Saudi Arabia has launched Jawharat Al-Arous, an SR8bn ($2bn) private-sector-led residential development in north Jeddah.
The scheme covers 107 million square metres and comprises 18 residential neighbourhoods planned to accommodate more than 700,000 residents. It will provide more than 80,000 residential and commercial plots.
The masterplan also includes 41 government-backed infrastructure and service zones to support large-scale urban expansion.
The project was unveiled by Mecca Region Governor Khalid Al-Faisal and will be overseen by Saud Bin Mishaal Bin Abdulaziz.
According to a recent report by real estate firm Cavendish Maxwell, Jeddah’s residential stock stood at about 1.09 million units at the end of 2025, following the completion of around 4,000 units that year.
An expanding pipeline of about 18,000 units in 2026 and 22,000 units in 2027 is expected to bring total stock to around 1.14 million units by 2027, gradually adding supply without destabilising market equilibrium.
GlobalData expects the Saudi construction industry to grow by 3.6% in real terms in 2026, supported by increased foreign direct investment (FDI) and investment in the housing and manufacturing sectors.
The residential construction sector is forecast to grow by 3.8% in real terms in 2026 and to record an average annual growth rate of 4.7% between 2027 and 2030, supported by Saudi Vision 2030’s goal of increasing homeownership from 65.4% in 2024 to 70% by 2030, including through the delivery of 600,000 homes by 2030.
MEED’s April 2026 report on Saudi Arabia includes:
> COMMENT: Risk accelerates Saudi spending shift
> GVT &: ECONOMY: Riyadh navigates a changed landscape
> BANKING: Testing times for Saudi banks
> UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
> DOWNSTREAM: Saudi downstream projects market enters lean period
> POWER: Wind power gathers pace in Saudi Arabia
> WATER: Sharakat plan signals next phase of Saudi water expansion
> CONSTRUCTION: Saudi construction enters a period of strategic readjustment
> TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure pushTo see previous issues of MEED Business Review, please click herehttps://image.digitalinsightresearch.in/uploads/NewsArticle/16640863/main.png -
Damage to US bases in region expected to cost more than $15bn1 May 2026
The $25bn estimate a Pentagon official gave US lawmakers on 29 April did not include the cost of repairing damage to US bases in the Middle East, and the real cost of the war is likely to be between $40bn and $50bn, according to CNN.
That would put the cost of repairing bases and replacing destroyed assets at between $15bn and $25bn.
Jules Hurst III, the Pentagon official serving as the agency’s comptroller, told the House Armed Services Committee that “most” of the $25bn he cited had been spent on munitions. Defence Secretary Pete Hegseth declined to say whether the figure included repairs to damaged US bases.
Iranian strikes across the Gulf in the early days of the war significantly damaged at least nine US military sites in 48 hours, hitting facilities in Bahrain, Kuwait, Iraq, the UAE and Qatar.
Six US servicemembers were killed in an attack on a command post in Kuwait, and 20 more were injured.
Three sources told CNN that the figure provided to the House Armed Services Committee did not include the cost of rebuilding US military installations and replacing destroyed assets.
One source said the true cost would likely be between $40bn and $50bn.
US contractors such as KBR and Fluor, as well as local firms, are likely to be among the leading contenders for contracts to repair and rebuild US bases in the region.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16638663/main.gif