The relationship between Saudi Arabia and Iraq is gaining increasing importance in the economic context, especially in light of regional transformations and the Kingdom's Vision 2030, which aims to enhance partnerships with neighboring countries. The phrase 'Saudi Arabia and Iraq' prominently appears in the Saudi financial market (Tadawul), with growing interest in investment opportunities in Iraq from major Saudi companies, particularly in the oil, energy, and infrastructure sectors. In recent years, bilateral trade and joint investments have seen remarkable growth, driven by Iraq's needs for reconstruction and local economic development, alongside Saudi Arabia's aim to diversify its foreign investments. Although there are currently no Iraqi companies listed on the Tadawul, leading Saudi firms such as Aramco and Mobily are playing a pivotal role in regional expansion and joint projects. This article will discuss the recent transformations in the relationship between Saudi Arabia and Iraq within the Tadawul market, presenting key financial indicators, analyzing influential sectors, and clarifying the main risks and opportunities for investors, in a neutral educational framework and in accordance with the regulations of the Capital Market Authority.
Defining the Economic Relationship Between Saudi Arabia and Iraq in the Financial Market
The economic relationship between Saudi Arabia and Iraq represents a model of regional integration supported by Vision 2030. Although there are currently no Iraqi companies listed in the Saudi financial market (Tadawul), the relations between the two countries are manifested in the investments of major Saudi companies in Iraq, particularly in the oil, petrochemicals, and real estate sectors. Iraq's significance as a promising market for reconstruction and infrastructure enhances Saudi investors' interest in expansion opportunities in this country. This cooperation also reflects on the confidence of regional investors, given the improvement in Iraqi economic indicators and the increasing demand for Saudi products and services. The concept of 'Saudi Arabia and Iraq' in Tadawul refers to opportunities for investment exchange, strategic projects, and building regional partnerships with long-term impacts on vital sectors.
Volume of Bilateral Trade and Joint Investments 2024-2025
Bilateral trade between Saudi Arabia and Iraq has witnessed steady growth in recent years, reaching approximately $5-6 billion in 2023, with expectations to exceed $10 billion annually in the coming years. This growth is attributed to reconstruction projects in Iraq and increased demand for Saudi goods in food, industry, and services. In terms of investments, Saudi Arabia plans to inject around 90 billion riyals ($24 billion) into infrastructure, energy, and industrial projects within Iraq, as part of the first phase of economic cooperation. These indicators suggest that Iraq has become an important investment hub for listed Saudi companies, which are now seeking expansion opportunities outside the local market, benefiting from the economic improvement in Iraq and the Saudi government’s support for regional projects.
The Oil and Energy Sector Between the Two Countries
Oil is the central pivot of the economic relations between Saudi Arabia and Iraq. Saudi Arabia, through companies like Aramco, exports large quantities of oil and derivatives to support the needs of the Iraqi market, while Iraq works to increase its production and develop its refineries. Saudi energy companies have expressed interest in expanding their operations in Iraq, particularly in oil field development projects and joint investment contracts. The energy market is also witnessing developments in electricity, with Iraq seeking partnerships to develop electricity networks and energy infrastructure with the expertise of Saudi companies. These partnerships contribute to enhancing energy security for both countries and open new horizons for investors in the renewable and oil energy sectors.
Economic Performance Indicators in Saudi Arabia and Iraq
The Iraqi economy has seen significant growth in GDP, reaching approximately $230 billion in 2023, with an annual growth rate of around 5-6%. This is primarily attributed to rising oil prices and increased production. Meanwhile, the Saudi economy's GDP reached nearly $950 billion during the same period, with continued reliance on oil while gradually diversifying income sources. This improvement in macroeconomic indicators positively reflects on the expectations of Saudi companies looking for expansion opportunities in Iraq, especially with contributions from sovereign investment funds such as the Saudi Public Investment Fund, which focuses on promising regional markets. On the other hand, these indicators support the stability of trade and financial relations between the two countries.
Saudi Listed Companies Related to Iraq
Despite the absence of Iraqi companies listed on Tadawul, major Saudi companies have direct or indirect relations with the Iraqi market. Notably, Saudi Aramco (symbol: 2222), the world's largest oil company, supplies part of its production to Iraq. In the telecommunications sector, Mobily obtained a license to operate telecommunications networks in Iraq in 2024, opening up future growth opportunities. Additionally, companies in the shipping, logistics, and contracting sectors are working on reconstruction projects in Iraq, even if they have not explicitly announced exclusive investments there. These companies benefit from growth opportunities in the Iraqi market and are working to diversify their regional income sources.
Analysis of the Oil and Petrochemicals Sector and Aramco's Role
The oil and petrochemicals sector occupies a leading position in Saudi-Iraqi cooperation, with Aramco Saudi Arabia excelling in both local and global markets. Aramco provides its expertise in oil production and marketing, participating in regional projects that include Iraq. Although Aramco has not announced direct investments in Iraqi oil fields, cooperation in refining and exporting is ongoing and is expected to expand in the future with the improvement of the investment climate in Iraq. Aramco competes with international companies in the regional market, but relies on its strength in financing and infrastructure, enhancing its ability to implement strategic projects in Iraq and other markets.
Telecommunications Sector and Regional Expansion via Mobily
Mobily Saudi Arabia has entered a new phase of regional expansion by obtaining a license to operate telecommunications networks in Iraq in 2024. This direction reflects the desire of Saudi companies to capitalize on growth opportunities in the Iraqi market, which is witnessing increasing demand for telecommunications services and digital infrastructure. Mobily faces competition from local and regional companies in Iraq, but its experience in operating modern networks may provide it with a competitive advantage. Mobily's success in Iraq depends on its adaptation to the local regulatory environment and building strong partnerships with Iraqi stakeholders, alongside gradual expansion in digital services and infrastructure.
Shipping and Logistics Services and the Role of Saudi Companies
Saudi companies in the shipping and logistics sector are playing an increasing role in supporting bilateral trade between Saudi Arabia and Iraq. These companies include providers of land transport and maritime shipping services, as well as those operating in port management and border crossings. With the growth of trade volume between the two countries, the need to develop logistics infrastructure has increased, prompting Saudi companies to sign contracts with Iraq to implement transport projects and build new roads. This sector also contributes to facilitating the movement of goods and services, reducing operational costs, and enhancing regional economic integration.
Banking and Financial Sector Between Saudi Arabia and Iraq
Although there are currently no Saudi banks listed with extensive branches in Iraq, banking cooperation between the two countries is on the rise. Facilitating financial transfers between Saudi Arabia and Iraq and opening joint banking channels enhance the flow of capital and investments. Saudi banks such as Al Ahli and Al Rajhi are collaborating with Iraqi banks to provide financing services and financial facilities, focusing on supporting Saudi exports and providing modern payment solutions. This financial cooperation represents a fundamental pillar in expanding trade and investment relations between the two countries and enhances the transparency of financial operations through accredited banking platforms.
Infrastructure and Transport Projects Between the Two Countries
Infrastructure and transport projects between Saudi Arabia and Iraq are witnessing notable development, with the implementation of new land roads and customs crossings to facilitate the movement of goods and individuals. Among the prominent projects is the 'Jabba – Rutbah – Baghdad' road, which connects the two countries, in addition to developing border crossings and joint industrial zones. Saudi contracting companies play a pivotal role in executing these projects, creating new growth opportunities for the real estate and construction sectors. These projects support economic integration goals, enhance regional trade, and facilitate the access of Saudi products to the Iraqi market.
Recent Government and Economic Developments 2024-2025
The year 2024 and early 2025 witnessed intensified activity at the level of government agreements between Saudi Arabia and Iraq, especially in the sectors of energy, transport, and electricity. Saudi Arabia launched joint projects in renewable energy in Iraq and signed a memorandum of understanding to establish a new oil pipeline connecting northern Iraq to a Saudi port on the Gulf. Agreements were also made to develop electricity networks and industrial infrastructure in Iraq with the participation of Saudi companies. These developments reflect the official direction towards deepening economic partnership and enhancing the presence of Saudi companies in strategic projects within Iraq.
Risks and Challenges Facing Saudi Investors in Iraq
Despite the significant opportunities, Saudi investments in Iraq face several challenges, the most prominent of which are political and security fluctuations that may affect business stability. Regulatory and legislative changes also pose a challenge for Saudi companies wishing to expand, in addition to the differences in administrative and cultural environments between the two countries. Other risks include oil price fluctuations and their impact on government project financing, as well as the need for local partners to manage operational risks. Therefore, it is essential for investors to study the market carefully, build strategic partnerships, and continuously monitor political and economic developments.
Future Cooperation Prospects and Growth Opportunities
Indicators suggest the continued expansion of economic cooperation between Saudi Arabia and Iraq, especially as both countries look to develop new sectors such as renewable energy, digital infrastructure, and the agricultural sector. In the coming years, joint investment funds are expected to be launched, and new financial products will be developed to allow Saudi investors to benefit from Iraqi market opportunities indirectly. The Saudi government also plays a key role in supporting companies wishing to expand through funding programs and encouraging foreign investment. These prospects enhance economic integration and support sustainable growth in both countries.
Overview of Performance Indicators for Saudi Companies Linked to Iraq
Performance indicators for major Saudi companies related to the Iraqi market show varied results. Saudi Aramco maintains a strong financial position, with a market value exceeding 9 trillion riyals and a stable dividend yield. Meanwhile, Mobily is experiencing a phase of expansion in Iraq, with expectations of improved financial results in the coming years following the completion of network projects. In the contracting and logistics services sector, Saudi companies are achieving gradual growth thanks to contracts linked to Iraqi projects. These indicators reflect the importance of the Iraqi market as a source of future growth for listed companies on Tadawul.
Conclusion
The growing relationship between Saudi Arabia and Iraq highlights the importance of regional partnership in achieving economic development goals and diversifying investments. As bilateral trade and joint investments continue to grow, major Saudi companies have become key players in reconstruction and infrastructure projects in Iraq. Promising opportunities are emerging in the oil, energy, telecommunications, and logistics sectors, despite challenges related to the regulatory and political environment. It is essential for investors to base their decisions on a thorough analysis of the economic environment and risks, leveraging the expertise of local partners and government support. The SIGMIX platform offers educational content and accurate analyses of the economic relations between Saudi Arabia and Iraq, emphasizing the importance of consulting a licensed financial advisor before making any investment decisions to ensure the safety of financial decisions and achieve desired goals.
Frequently Asked Questions
The volume of trade between Saudi Arabia and Iraq was approximately $5-6 billion in 2023, with expectations to increase to over $10 billion annually in the coming years. This growth reflects rising demand for Saudi products in Iraq, particularly in food, energy, and industry, alongside the expansion of reconstruction projects that create new opportunities for Saudi companies. These relations benefit from geographical proximity and supportive government policies to facilitate trade.
The oil and gas sector stands out as the most important investment area for Saudi investors in Iraq, followed by construction, renewable energy, telecommunications, and logistics sectors. Significant opportunities also exist in the agricultural sector and food security, especially as Iraq aims to diversify its economy. The financial and banking sectors are also promising, with potential for establishing banking partnerships and modern payment technologies between the two countries.
There are currently no Saudi companies listed specifically dedicated to investing in Iraq, but companies like Saudi Aramco and Mobily have direct relations with the Iraqi market. Aramco exports oil and derivatives to Iraq and is looking for future partnership opportunities. Mobily obtained a license to operate telecommunications networks in Iraq in 2024 and is seeking to expand there. Saudi contracting and logistics companies are also participating in Iraqi reconstruction projects.
The main risks include political and security fluctuations that may affect the stability of the business environment, as well as regulatory and legislative changes. There are also challenges related to differences in administrative and cultural environments, and the necessity of collaborating with local partners to manage operational risks. Oil price fluctuations can impact government project financing in Iraq, which in turn affects Saudi investment plans.
Currently, there are no Iraqi companies listed on the Saudi financial market. The Capital Market Authority focuses on attracting Gulf companies for dual listing and has not announced plans to list Iraqi companies. Listing Iraqi companies may require the development of the local financial market there first, but it is possible in the future to launch joint investment funds or financial products that allow Saudi investors indirect exposure to Iraqi assets.
Both Saudi Arabia and Iraq primarily rely on oil to finance their economies, making cooperation in this sector strategic. Rising oil prices provide resources for implementing joint projects, while declining prices push for accelerated economic diversification. Iraq can benefit from Saudi expertise in utilizing oil revenues for development projects, while Saudi Arabia seeks to reduce reliance on oil by developing other sectors in Iraq.
Saudi banks facilitate financial transfers to Iraq through partnerships with Iraqi banks, with the SWIFT system in place and the use of documentary credit mechanisms in trade. Some Saudi and Iraqi banks have also launched joint banking cards for use in both countries. These facilities contribute to supporting bilateral trade and facilitating the movement of capital and investments.
Among the prominent logistics projects is the 'Jabba – Rutbah – Baghdad' road, which is part of an international road network connecting the two countries. Border crossings and joint industrial zones have been developed to enhance land shipping movement, with Saudi companies participating in implementing these projects. This infrastructure supports increased trade and facilitates the access of goods and services from Saudi Arabia to the Iraqi market.
Partnering with local parties in Iraq is a necessary step to reduce legal and administrative risks, and to understand the local regulatory and cultural environment. These partnerships help facilitate operations, comply with local laws, and provide effective solutions to challenges that Saudi investors may face. Partnering with local partners also grants access to a wide network of relationships that ease business procedures.
Saudi investors should carefully study the Iraqi market, build partnerships with reliable local entities, and start with small to medium projects before expanding into large-scale projects. It is important to monitor political and economic developments and take advantage of Saudi government support programs, in addition to consulting a licensed financial advisor to ensure informed and safe investment decisions.