Heightened geopolitical tensions remain a risk for Saudi Arabia even though there is a low probability of revenues getting hit, a Fitch Ratings expert said Wednesday.
“Clearly the escalation of tensions with Iran is a big issue, no question about it,” Jan Friederich, head of Middle East and Africa sovereign ratings at Fitch Ratings, told CNBC’s Hadley Gamble.
Geopolitical tensions between Saudi Arabia and Iran have been in focus amid an ongoing civil war in Yemen. The conflict is regarded as a proxy battle between Saudi Arabia and Iran and their competing ideologies of Sunni and Shia Islam, respectively.
While Sunni-ruled Saudi Arabia backs the government of President Abdrabbuh Mansour Hadi, Iran backs the pro-Shia Houthi movement loyal to the country’s former president Ali Abdullah Saleh.
Although there is a slim chance those tensions would result in an appreciable hit to business, they’re still worth paying attention to, according to Friederich.
“It’s totally something that is now becoming pretty core to the assessment even though the probability of anything really dramatic happening probably is still quite low, because both sides know how much is at stake,” he said.
Media in Saudi Arabia reported last month that Houthi forces launched missiles at a Saudi Aramco facility, but those had been destroyed, Reuters reported.
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