Coastal environments need continuous environmental risk assessment, especially with increasing coastal development and human activities. The present work evaluates the distribution, contamination, and environmental risk of potentially toxic elements (PTEs) in coastal sediments between Al-Jubail and Al-Khafji cities along the Arabian Gulf, Saudi Arabia, and documents the influence of background references applied in pollution indices. Thirty-two sediment samples were collected for analysis of Ni, Cu, Cr, As, Zn, Pb and Hg using ICP-AES. The ranges of PTEs (mg/kg) were in the following order: Cr (3.00–20.0), Ni (2.00–32.0), Zn (2.00–14.0), As (2.00–4.00), Pb (1.50–5.00), Cu (1.00–5.00), and Hg (0.50–1.00). The coastal sediments show severe enrichment with As and Hg, and no to minor enrichment and a low contamination with Cr, Cu, Cr, Zn, and Pb. Based on sediment quality guidelines, concentrations of Cu, Pb, Zn, As, and Cr do not represent a concern for benthic communities, while Ni and Hg show a risk for benthic communities in four and 17 sampled areas, respectively. Multivariate analysis indicated a geogenic source for Zn, Cr, Cu, Ni, and Pb, mixed natural and anthropogenic sources for As, and an anthropogenic source for Hg, mostly from oil pollution, sewage, and industrial effluents spreading near Al-Jubail industrial city.