The agreement signals Riyadh's plan to balance its domestic needs, energy export strategy and regional security, writes Bachar Halabi
Saudi Arabia's preliminary nuclear co-operation agreement with the US marks the most significant step yet in the kingdom's decades-long effort to launch a civilian atomic energy programme. The decision is not only aimed at reshaping its long-term power mix but also at strengthening US-Saudi relations in a way that carries geopolitical consequences for the future of the wider Middle East.
Washington and Riyadh finalised a "123 Agreement" this week during Crown Prince Mohammed bin Salman's visit to the White House, clearing a legal pathway for US reactor technology and fuel-cycle services to be transferred to the kingdom after US Congress ratifies the deal. This deal does not commit Saudi Arabia to a specific supplier or project timeline, but it signals that a programme Riyadh first placed on its agenda in 2009 is now entering a more concrete phase.
Saudi Arabia's interest in nuclear power has grown in recent years because of the policy and economic shifts embodied in the Vision 2030 diversification agenda that Prince Mohammed has championed. A central pillar of that agenda is the complete phase-out of crude and fuel oil burning from the power sector by the end of this decade, replaced by a 50pc natural gas and 50pc renewables mix. Nuclear generation has not been listed as a formal target, but it is increasingly viewed by policy-makers as a tool to reinforce base-load capacity as the country electrifies new industries, faces steep structural growth in electricity demand and builds its energy-intensive "economy of the future", including artificial intelligence (AI), data centres, critical minerals and advanced manufacturing.
Saudi demand for electricity is set to rise exponentially, with peak demand hitting about 77.1GW this summer, according to Saudi energy ministry sources. And as the country's population grows and Riyadh aims to expand heavy industry, water desalination and urban development, power demand will continue to rise.
But a first-phase nuclear programme of one or two large reactors — the scale officials have referenced publicly — would only supply a small share of the kingdom's total electricity. The neighbouring UAE's 5.6GW Barakah nuclear plant accounts for roughly 20pc of national power generation. Deploying similar capacity in Saudi Arabia would meet about 7pc of domestic load at current estimates. And Barakah remains the largest nuclear project in the region, exceeding Egypt's 4.8GW El Dabaa development and Turkey's similarly sized 4.8GW Akkuyu plant currently being built.
Long-term thinking
Saudi officials acknowledge the timeframes involved. In September 2024, Saudi energy minister Prince Abdulaziz bin Salman said the kingdom had "completed all preparations" for a nuclear programme and submitted a request to nuclear watchdog the IAEA to move from the small quantities protocol to a full safeguards agreement, a pre-requisite for receiving significant nuclear material. But even if Riyadh selects a vendor in the next 12–24 months, typical construction timelines mean a multi-gigawatt plant is unlikely to come on line before the mid-2030s.
The timing of the Saudi-US deal aligns with a broader international shift in perceptions of the nuclear power landscape. The launch of the UAE's Declaration to Triple Nuclear Energy at Cop 28 marked a significant change in global climate policy thinking, committing signatory countries to "advance a global aspirational goal of tripling nuclear energy capacity from 2020 by 2050". The endorsement has injected fresh legitimacy into civil nuclear-power projects and shifted political economy dynamics in favour of building new reactors. For countries such as Saudi Arabia, the international environment is now more favourable than at any point in the past few years.
Riyadh's push into nuclear and gas is also tied to its long-running crude displacement strategy, under which the kingdom aims to eliminate the use of crude and fuel oil in power generation in order to free up more supply for export. State-controlled Saudi Aramco has been accelerating non-associated gas development, particularly through the massive Jafurah unconventional programme slated to begin production in the coming weeks. This will mark a significant step towards its goal of freeing up to 1mn b/d of oil, either for export or to feed its growing liquids-to-chemical business, over the coming years.
The prospect of structurally higher exportable crude volumes is one reason the Saudi state last year paused plans for Aramco to lift its maximum sustainable crude production capacity beyond 12.3mn b/d, arguing that efficiency gains and lower domestic burning could deliver similar market outcomes without the cost of additional upstream expansion.
And as the country positions itself as a low-carbon-intensity hydrocarbon producer with the largest spare capacity available, reducing domestic burning aligns with both commercial strategy — including lowering Scope 1 and 2 methane emissions — and Vision 2030's evolving priorities.
Atomic synergy
Riyadh's decision to anchor its initial nuclear steps in a US framework strengthens its strategic alignment with Washington at a moment of renewed heightened bilateral engagement under the administration of President Donald Trump. It also limits the scope for alternative vendors such as Russia's Rosatom or China's CNNC to establish a foothold in the kingdom's atomic sector. Saudi Arabia is making its favoured strategic choice clear to the world.
The Saudi-US nuclear accord was part of a broader package of commercial and strategic deals signed in Washington this week — including co-operation on critical minerals, AI and expanded Saudi investment in the US economy. Collectively, that signals a renewed vote of confidence by the Saudi leadership in its strategic partnership with Washington at a time when several other medium powers are hedging or pursuing multi-alignment strategies.
Meanwhile, Israel has long viewed regional nuclear programmes through a security lens. It struck Iraq's Osirak reactor in 1981 under the former regime of Saddam Hussein and Syria's Al-Kibar site in 2007 under the former regime of Bashar al-Assad. More recently, it repeatedly targeted elements of Iran's nuclear infrastructure, culminating in June this year when it launched a 12-day bombing campaign aimed at degrading Tehran's enrichment capabilities.
Against that backdrop, a US-led 123 framework is likely to be read in Tel Aviv as a stabilising arrangement that ensures stringent safeguards, external oversight and the exclusion of rival suppliers. For US policy makers, the agreement fits into a broader effort to shape regional nuclear norms, especially after Washington participated in the June Israel-Iran conflict to try to ensure Iran's enrichment programme does not allow for weaponisation.
But although nuclear will not reshape Saudi Arabia's power system overnight, anchoring the programme in a US partnership signals a decisive long-term shift in how Riyadh intends to balance its domestic energy needs, energy export strategy and regional security environment. The agreement lays the foundation for a sector that will support the country's industrial expansion, reinforce its crude strategy, tie its nuclear trajectory to global non-proliferation norms and further solidify the US security umbrella. Its real significance will emerge gradually — in how it influences Saudi Arabia's economic model, foreign partnerships and regional role well into the 2040s.
