Saudi Arabia Cancels $2.5bn World Cup Stadium, Entertainment Events Amid Oil Export Crisis

Saudi Arabia has canceled multiple ambitious development projects and entertainment events amid worsening budget shortfalls caused by falling oil exports and the closure of the Strait of Hormuz.

The kingdom canceled plans to build a $2.5 billion stadium for the 2034 FIFA World Cup, Reuters reported on October 5, as budget shortfalls cripple its most ambitious development projects.

The cancellation was announced by MEED Projects, a construction intelligence platform, which said the project is “on hold” indefinitely.

The luxury sports venue was to be built 350 meters above ground as one of 15 venues in five Saudi cities scheduled to host World Cup matches.

The stadium was planned as part of The Line project, a 160 km-long futuristic city included within Saudi Arabia’s $1.5 trillion flagship NEOM project.

In January, the Financial Times (FT) reported that the NEOM project would be significantly “downscaled and redesigned” after years of delays and budget overruns.

Crown Prince Mohammed bin Salman (MbS), NEOM’s chair, was planning something “far smaller,” signaling the failure of the original, highly ambitious concept after the initial construction phase.

The kingdom’s financial situation has deteriorated further because of the US-Israeli war on Iran, which began in February. Tehran responded by closing the Strait of Hormuz, disrupting Saudi oil exports.

Saudi Arabia’s finance ministry is anticipating a budget deficit this year and a 3.6 percent fall in real GDP.

Launched in 2017, Saudi Arabia’s NEOM, a sprawling high-tech development on the northwestern Red Sea coast, was introduced as the crown jewel of Vision 2030.

The Line, a planned 170 km linear city viewed as the centerpiece of the futuristic desert mega-project, was to redefine urban living.

The Mukaab, a colossal cube-shaped skyscraper in Riyadh’s New Murabba development, has also been put on hold.

Saudi officials have also canceled next year’s Joy Awards amid efforts to reduce spending on major entertainment events, Reuters reported on Monday.

The annual televised gala was first held in 2019 and takes place in January. Saudi Arabia’s General Entertainment Authority and MBC Group organize it, and a wide range of US film and music celebrities attend.

Joy Awards categories include film, television, music, sport and social media. The festival also presents Lifetime Achievement and Personality of the Year awards.

Saudi officials have also canceled the Red Sea International Film Festival and Soundstorm, an annual music festival. Both events were scheduled for December.

The wave of canceled projects and events comes as oil stockpiles that cushion the world economy from supply shocks have become “scarily thin,” putting the world economy and markets at risk unless the Strait of Hormuz reopens, the CEO of Saudi state oil company Aramco warned on Monday.

“Until Hormuz fully reopens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify,” Amin Nasser said at the Energy Intelligence Forum in London.

Even if Hormuz reopens, he said it may take energy-consuming countries as long as two years to replenish their stockpiles.