Section Article

AN ANALYSIS OF THE IMPACT OF THE DEVALUATION OF THE SAUDI RIYAL ON OIL EXPORTS USING THE J-CURVE FRAMEWORK
Author(s): Bhajan Kaur

Abstract
The devaluation of the Saudi Riyal (SAR) carries significant implications for global oil markets and trade balances. This study examines the impact of currency devaluation on Saudi Arabia’s oil exports through the lens of the J-Curve framework which predicts an initial deterioration in trade balance following devaluation followed by a subsequent improvement as export volumes adjust. Post-2021 economic data trade statistics and currency fluctuation analyses indicate that the devaluation of the Riyal can influence Saudi oil export competitiveness global pricing strategies and revenue generation. By synthesizing empirical studies macroeconomic analyses and international trade reports this research provides a comprehensive understanding of the short- and medium-term effects of currency devaluation on oil trade. Stakeholder perspectives including policymakers export managers and global oil market participants highlight the operational strategic and policy-related ramifications of currency movements. The study further integrates insights on exchange rate pass-through demand elasticity and contractual pricing mechanisms in oil markets. Results suggest that the devaluation initially reduces export revenue in local currency terms due to fixed contract obligations and inelastic global oil demand consistent with the J-Curve effect but over time enhances competitiveness leading to increased export volumes and partial recovery of revenue. Recommendations include strategic hedging policies flexible contract management and monitoring of global oil demand elasticity to mitigate risks and maximize benefits. The study contributes to the broader literature on exchange rate dynamics resource-dependent economies and the strategic management of oil exports under fluctuating currency conditions.