The relations between Saudi Arabia and Iraq have witnessed significant development in recent years, particularly with the growing interest in expanding economic and investment cooperation between the two countries. The phrase "Saudi Arabia and Iraq" has gained increasing importance among investors and those interested in regional economic affairs, especially those monitoring developments in the Saudi financial market. The cooperation between the two countries intersects in several key areas, most notably the energy sector, where Saudi Arabia is one of the largest oil producers globally, while Iraq possesses vast reserves and seeks to develop its energy infrastructure with Saudi investment support. Conversely, Iraq is looking to attract Saudi capital to implement massive development projects in infrastructure and services.
At the level of the Saudi financial market, the impact of this cooperation is evident in enhancing liquidity, increasing investment opportunities, and attracting new companies linked to the regional economy. According to statements from officials at Tadawul, the inclusion of the Saudi market in global indices such as the JP Morgan Bond Index has contributed to raising liquidity and attracting new investors, including those interested in opportunities in Iraq. Additionally, the growth in trade exchange and the rise in exports of goods and services between the two countries have reflected on market dynamics, amidst a more open regulatory environment and ease of entry for foreign investments.
In this comprehensive article, we will deeply review the evolution of economic relations between Saudi Arabia and Iraq, detail the indicators of the Saudi financial market, and analyze the shared sectors, highlighting competitors, opportunities, risks, and the latest regulatory developments, catering to the needs of investors seeking a neutral and in-depth understanding of this vital file.
Evolution of Economic Relations Between Saudi Arabia and Iraq
The economic relations between Saudi Arabia and Iraq have gone through varying stages of cooperation and challenges; however, recent years have witnessed a qualitative shift supported by converging political and economic visions. Since 2021, the pace of trade exchange has been on the rise, with the opening of border crossings and the signing of cooperation agreements in the energy, petrochemicals, and electricity sectors. Saudi Arabia has aimed to support Iraq in reconstruction projects, while Baghdad has sought to attract Saudi capital as a strategic partner. This direction has been reinforced by a relatively stable security situation and the development of the legislative framework for investment in Iraq, opening new horizons for Saudi investors to benefit from promising opportunities in the Iraqi market.
On the other hand, this relationship complements Saudi Vision 2030, which aims to diversify income sources and increase foreign investments, viewing Iraq as a neighboring market with significant potential in energy, agriculture, and manufacturing industries. In terms of direct impact, bilateral agreements have contributed to increasing the volume of Saudi exports to Iraq, particularly in industrial goods, food products, and electricity, while imports of oil and gas from Iraq to the Kingdom have gradually increased. These figures are likely to grow with the easing of customs restrictions and the enhancement of logistical cooperation between the two countries.
Overview of Economic Indicators for Saudi and Iraqi Economies 2024–2025
Data for 2024 and 2025 indicate the continued recovery of both the Saudi and Iraqi economies. Iraq's GDP is expected to grow between 4-5%, supported by increased oil exports and the lifting of some production restrictions within the OPEC+ alliance. Meanwhile, the Saudi economy has seen sustainable growth approaching 3-4%, driven by growth in the services sector and non-oil industries, supported by Vision 2030.
In terms of bilateral trade, Saudi exports to Iraq have significantly increased, particularly in industrial products and electricity. Iraq's exports of oil and gas have also risen, thanks to increased regional demand and global oil prices. The Saudi stock market (TASI) recorded a 5.1% increase in September 2025, achieving its highest level in five years, amid investor optimism regarding the easing of foreign ownership restrictions and increased transparency.
This performance has enhanced the status of the Saudi market as a regional investment destination, making it more attractive for partnerships with neighboring countries like Iraq, as the market capitalization of listed stocks continues to rise and demand from local and foreign investors increases.
Role of the Saudi Financial Market in Enhancing Regional Cooperation
The Saudi financial market (Tadawul) is a key hub for attracting regional investments, thanks to its status as the largest market in the Arab world and the strength of its regulatory framework. Recent years have seen efforts to facilitate foreign investor entry by raising the foreign ownership limit, updating disclosure systems, and including the market in global indices such as the JP Morgan Bond Index.
This openness has contributed to increased liquidity, encouraging regional companies to list or expand their operations within the Saudi market. It has also enhanced partnership opportunities with Iraq, particularly in sectors that benefit from economic integration, such as energy, infrastructure, and financial services. The Saudi Capital Market Authority continues to update regulations to ensure a more attractive and transparent investment environment, positively reflecting on any potential Saudi-Iraqi entity or joint companies operating in the market.
Energy Sector: The Core of Cooperation Between Saudi Arabia and Iraq
The energy sector is the beating heart of economic relations between Saudi Arabia and Iraq. Saudi Arabia is one of the largest oil producers and exporters in the world, while Iraq holds the second-largest oil reserves in the Arab world. Their synergy is evident in oil refining projects, electricity production and distribution, and renewable energy investments.
In recent years, cooperation agreements have been signed between Saudi Aramco and the Iraqi National Oil Company to develop oil fields and utilize modern mining technologies. Agreements have also been made to establish joint power plants with a supply capacity of 500 megawatts in northern Iraq, providing practical solutions to the Iraqi electricity crisis and offering Saudi companies investment opportunities in a highly profitable sector.
In addition to oil, cooperation is shifting towards renewable energy, with Saudi Arabia seeking to export its expertise in solar and wind energy to Iraq, paving the way for joint projects that support the energy transition in the region.
Infrastructure and Transport: Opportunities for Joint Growth
The infrastructure and transport sector is one of the promising areas for Saudi-Iraqi cooperation. Iraq faces significant challenges in modernizing its road networks, ports, and bridges after years of neglect, making it in need of the expertise of large Saudi companies in executing massive construction projects.
During 2024-2025, discussions have taken place regarding the possibility of establishing a Saudi-Iraqi corridor linking Iraq to the Gulf region via Saudi Arabia, alongside the development of Iraqi ports with Saudi investment support and funding from the Public Investment Fund. Baghdad has also seen the opening of representative offices for Saudi engineering companies to contribute to reconstruction projects.
These projects are characterized by reasonable profit margins but require substantial capital and provide long-term growth opportunities. Saudi investors are particularly interested in this sector due to Iraqi tax exemptions and Saudi government support for regionally significant projects.
Key Competitors in the Saudi Market and Available Opportunities
In the event of establishing a joint Saudi-Iraqi entity or holding company, it will face strong competition from leading Saudi companies in energy and infrastructure. Saudi Aramco leads the oil and refining sector, while the Saudi Electricity Company and ACWA Power are among the largest players in traditional and renewable energy production.
In the infrastructure sector, companies like Arab Contractors Saudi Arabia and Saudi Oger (formerly) compete for major projects, while major Saudi banks play a pivotal role in financing large projects. In the financial services and telecommunications sector, banks like National Commercial Bank and Al Rajhi stand out, along with companies like STC and Kingdom Holding, although competition here is less intense compared to energy and infrastructure.
Therefore, any joint Saudi-Iraqi project needs a differentiation strategy, whether through specialization in underserved areas, collaboration with foreign companies, or offering advanced technologies that provide added value in the local and regional market.
Financial Indicators Analysis for Energy and Infrastructure Companies
Financial indicators for entities operating in the energy and infrastructure sector in Saudi Arabia show strong performance in 2024. The average price-to-earnings (P/E) ratio for major energy companies like Aramco ranged between 15 and 25 times, supported by rising export revenues and increased regional demand. The return on cash distributions has been attractive, especially with improved quarterly profits due to stable oil prices and modern production technologies.
In the infrastructure sector, major construction companies achieve stable profit margins, with the potential to benefit from long-term contracts in Iraq. Companies like Arab Contractors Saudi Arabia and their counterparts have recorded revenue growth due to their participation in regional projects, alongside government support for reconstruction projects.
Overall, the financial performance of these sectors reflects the investment attractiveness for any potential Saudi-Iraqi entity, especially with increasing government spending on energy and infrastructure projects in both countries.
Impact of Saudi Regulatory Policies on Regional Investments
The Saudi Capital Market Authority has made significant amendments to foreign ownership policies, allowing the foreign ownership limit in listed companies to exceed 49% in certain selected sectors. This regulatory development has increased the market's attractiveness for regional investments, particularly for Iraqi investors looking to enter as strategic partners.
This openness has enhanced market liquidity and increased trading volume, as well as contributed to supporting partnership projects between Saudi Arabia and Iraq by providing additional external financing. With the continued updating of laws and the facilitation of disclosure and oversight procedures, the Saudi market has become more capable of attracting capital from neighboring countries and providing a competitive investment environment characterized by transparency and fairness.
Risks and Challenges Facing Saudi-Iraqi Cooperation
Despite the promising opportunities, Saudi-Iraqi cooperation faces several risks and challenges that must be considered. Foremost among these is the political and security stability in Iraq, where regional tensions may disrupt projects or increase insurance costs. Additionally, fluctuations in global oil prices directly affect both countries' ability to finance joint projects, especially with the Iraqi economy's heavy reliance on oil revenues.
There are also procedural challenges related to differing regulatory governance and difficulties in obtaining investment permits and transferring profits between the two countries. The volatility of the Iraqi currency and existing banking restrictions may complicate financial operations. Finally, Saudi projects face strong competition from foreign companies active in the Iraqi market, requiring clear strategies for differentiation and superiority in a changing competitive environment.
Government Incentives for Saudi Investors in Iraq
The Iraqi government offers various incentives to attract Saudi investments, including tax exemptions extending for five years, customs facilitation, and government support for essential infrastructure. In 2024, a joint investment fund was announced to support energy and infrastructure projects, providing concessional loans for major projects.
On the other hand, the Saudi government is facilitating profit repatriation procedures and providing financing guarantees for investors in Iraq, along with supporting vital infrastructure projects. Efforts are also underway to simplify procedures between Saudi and Iraqi banks, expediting financial transfers and reducing financing risks. These combined incentives create an encouraging investment environment for joint ventures and support the implementation of massive projects in energy, transport, and services.
Impact of Saudi Vision 2030 on Economic Cooperation with Iraq
Saudi Vision 2030 plays a pivotal role in driving economic cooperation with Iraq by encouraging foreign investments and diversifying the national economy. Within the vision, Saudi Arabia seeks to enhance its position as a regional financial hub and develop non-oil sectors such as renewable energy, infrastructure, and technology.
Iraq is considered a natural market for this expansion, given its need for massive investments in reconstruction and energy development. Partnerships with Iraq come in the context of achieving the vision's goals by transferring expertise, localizing industries, and opening new markets for Saudi exports. These partnerships also enhance the Kingdom's ability to lead major regional initiatives and support its position in the global economy.
Latest Developments and News in Saudi-Iraqi Cooperation (2024–2025)
The years 2024 and 2025 witnessed a series of positive developments in Saudi-Iraqi relations. Cooperation agreements in the energy sector were signed between Saudi Aramco and the Iraqi Oil Company, and an agreement was reached to establish a joint power plant in northern Iraq with a capacity of 500 megawatts. The Saudi Public Investment Fund announced the study of investment opportunities in Iraqi ports and roads, with the participation of Saudi companies in a conference to support the Iraqi economy.
On the political level, new measures were announced to facilitate banking transactions, protect private sector investments, and reduce money transfer risks. Temporary customs duties on certain products were also reduced to stimulate bilateral trade. These developments reflect the desire of both countries to deepen economic cooperation and create a favorable environment for the growth of joint investments in the near future.
How to Track the Performance of Saudi-Iraqi Companies on Tadawul
Investors can track the performance of any joint Saudi-Iraqi entity once it is listed on the Saudi Tadawul market. The official Tadawul website provides detailed information about stock prices, market capitalization, P/E ratios, dividend yields, and quarterly earnings results. Financial reports and the latest regulatory announcements can also be accessed through platforms like Argaam and Arqam.
These platforms also allow for comparing the company's performance with competitors in the sector, analyzing key financial indicators, and monitoring market developments that impact performance. It is always advisable to review reports issued by the Saudi Capital Market Authority to obtain an accurate and reliable picture of the financial status of any Saudi or Saudi-Iraqi joint company.
الخلاصة
An overview of the relations between Saudi Arabia and Iraq indicates that economic cooperation between the two countries is progressing rapidly, supported by integration in the energy sector, growing opportunities in infrastructure, and encouraging regulatory policies from the Saudi side. These developments contribute to making the Saudi financial market an attractive environment for regional investments, especially with the recent openness in foreign ownership policies and the facilitation of regulatory procedures.
However, challenges remain that must be addressed, most notably political stability in Iraq and fluctuations in global oil prices. Therefore, investors should study all aspects related to investing in any potential Saudi-Iraqi entity and continuously monitor regulatory and economic developments.
The SIGMIX team emphasizes the importance of consulting a licensed financial advisor before making any investment decisions, especially in areas where multiple regional risks and opportunities intersect. Specialized consultation helps build a well-considered investment decision that aligns with financial goals and risk tolerance. For more information and analyses, please follow updates on the SIGMIX platform and receive support from our certified experts.
الأسئلة الشائعة
The economic relationship between Saudi Arabia and Iraq is based on resource integration and mutual benefit. Saudi Arabia has a surplus in oil and gas production and some industrial products, while Iraq is rich in oil resources and seeks to develop its infrastructure with Saudi investment support. In recent years, trade exchange has grown, especially in energy, industrial goods, and food. Saudi investors are looking to exploit opportunities in Iraqi reconstruction projects, while Iraqi companies aim to expand their presence in the Saudi market.
Official estimates indicate that the size of trade exchange between Saudi Arabia and Iraq has reached billions of dollars annually, supported by increased exports of Saudi industrial goods and electricity, and rising exports of oil and natural gas from Iraq. However, this size remains below aspirations due to logistical and regulatory challenges, and it is expected to rise in the future with the development of infrastructure and the easing of customs restrictions between the two countries.
The energy sector (oil, gas, electricity) ranks first as the most profitable sector, as Iraq has a high demand for energy, providing lucrative investment opportunities. The infrastructure and transport sector is also of particular importance due to Iraq's need to develop ports and roads. Additionally, manufacturing and chemical industries emerge as promising areas for joint investment, especially if there is cooperation to reduce customs fees and facilitate the entry of raw materials.
The main risks are related to political and security stability in Iraq, where disturbances may affect project implementation. Additionally, fluctuations in global oil prices impact the budgets of both countries. There are also procedural challenges such as differing regulatory laws, difficulties in profit repatriation, and fluctuations in the Iraqi currency exchange rate. Competition from foreign companies in the Iraqi market is an additional challenge that requires continuous market study and differentiation strategies.
Saudi Vision 2030 focuses on diversifying the economy and increasing foreign investments, making Iraq a strategic target for Saudi expansion. The vision supports non-oil projects and drives regional partnerships in renewable energy and infrastructure, enhancing Saudi investment opportunities in Iraq and contributing to sustainable development for both countries.
The Iraqi government offers incentives such as tax exemptions extending for five years, customs facilitation, and government support for infrastructure. A Saudi-Iraqi fund has also been established to support energy and infrastructure projects. From the Saudi side, profit repatriation procedures are facilitated, and financing guarantees are provided, along with encouragement for regionally significant projects and logistical support for investors.
Investors can track the performance of any Saudi-Iraqi joint company through the Tadawul Saudi website, which provides data on stock price, market capitalization, P/E ratio, dividend yield, and quarterly earnings results. Financial reports can also be accessed through platforms like Argaam and official reports issued by the Saudi Capital Market Authority, helping investors objectively and transparently evaluate the company's performance.
The Saudi Capital Market Authority recently allowed an increase in the foreign ownership limit in some listed companies to over 49%, enhancing the market's attractiveness for regional investors, especially Iraqis. This openness has led to increased liquidity and trading volume, facilitating the execution of partnership projects between Saudi Arabia and Iraq. It has also helped attract new capital and improve the investment environment by providing greater opportunities for external financing.
Global oil prices are a critical factor in supporting or constraining opportunities for economic cooperation between the two countries. Rising prices enhance Saudi Arabia and Iraq's ability to finance joint projects and increase investment in infrastructure and energy. Conversely, falling prices may lead to reduced government spending and delays in some projects. Therefore, monitoring oil prices remains essential for investors interested in Saudi-Iraqi cooperation.
Yes, Saudi-Iraqi entities face strong competition from major local companies such as Aramco, the Saudi Electricity Company, and ACWA Power in the energy sector, and from construction companies and banks in infrastructure and financing. There are also active foreign competitors in the Iraqi market, particularly Turkish and Chinese companies. This requires Saudi-Iraqi companies to develop competitive advantages, such as advanced technology or partnerships with international financing institutions, to remain competitive.