THIS MORNING: PIF is mulling a new logistics champion

Good morning, wonderful people. We are back in your inbox after what we hope was a relaxing long Eid vacation for you and your loved ones.

Bad news first: The uneasy standoff between the US and Iran has not yielded a deal yet, and it’s anybody’s guess whether the fighting will continue at this point.

The good news? Moody’s gave the Kingdom’s credit a clean bill of health, citing steadier government finances and diversification efforts that keep widening the non-oil base. We have more on this in today’s news well, below.

Also in today’s issue: Aramco exited a USD 7 bn downstream partnership in Malaysia to free up liquidity, and our latest trade figures from Gastat are out. Let’s dive in.

Watch this space

PIF WATCH — The Public Investment Fund is exploring the creation of a multi-bn USD national logistics champion, unnamed sources told Bloomberg. The new entity will combine parts of its ports, rail, and shipping portfolio into a single platform that could potentially become a sizable vehicle deploying investments across the sector.

What we know so far: The proposal could eventually pave the way for external capital, with the PIF considering bringing in international investors and pursuing an IPO at a later stage. Talks remain in their early stages, with no final decisions taken on the structure of the entity or the assets that would be included.

Why it matters: The ongoing disruptions to regional trade routes highlighted the importance of the Kingdom’s alternative logistics corridors, including the Red Sea ports. The consolidated firm would work on Saudi’s supply chain network, opening new trade routes, creating new investment opportunities, reducing reliance on the Strait, and avoiding future disruptions, the business information service reported.

It’s all part of the fund’s strategy for the next five years: PIF’s 2026-2030 strategy prioritizes nurturing businesses capable of generating sustainable returns and turning portfolio companies into global champions. Priority sectors singled out for focus include logistics and infrastructure.

OIL — More price cuts for Asian-bound oil? Saudi Arabia is expected to cut July crude prices for Asian buyers by USD 3-8 / bbl, marking the second consecutive month of price cuts, according to a Reuters survey. Flagship Arab Light crude is set to come down to a premium of USD 7.5-12.5 / bbl above Dubai and Oman average quotes.

The price cuts come as the Asian spot market cools down fast. The premium for Dubai crude collapsed by nearly 40% in May, dropping to an average of USD 8.90 / bbl from over USD 13 in April.

Why this matters: The Kingdom is trying to protect its market share as major buyers pull back. Chinese refiners — our biggest customers — slashed their oil purchases in May and June after getting squeezed by poor refining margins. Meanwhile, global supply pressure is easing as the US has exported more oil to cover Middle East shortfalls, and growing hopes of a US-Iran deal to reopen the Strait of Hormuz have pushed global prices below USD 100 per barrel.

INFRASTRUCTURE — Making Riyadh cooler: Saudi is set to begin implementing the Riyadh cooling project next year, unnamed sources told Aleqtisadiah. Greece-based consulting firm Planet is appointed as a lead consultant for the project, which aims to reduce the temperatures of asphalt surfaces and building facades by 8-15 degrees across the capital.

The details: The cooling project will identify the areas most affected by rising temperatures based on factors, including building density, facade materials, and the availability of open spaces. Five pilot zones have already been selected to test and evaluate cooling solutions, the sources said. The proposed cooling methods include heat-reflective road materials, upgraded pedestrian surfaces, open water channels, evaporation ponds, and additional landscaping.

Data point

2.4% — that’s how much the Construction Cost Index (CCI) rose y-o-y in April 2026, the highest increase since Gastat started collecting data (pdf) in January 2024. Construction costs increased 2.7% y-o-y for the non-residential sector and 2.4% y-o-y for the residential sector, driven by sharp spikes in the cost of renting equipment and machinery, as well as rising labor and energy costs. On a monthly basis, overall construction costs ticked up 0.5% compared to March.

Entertainment

The holiday was an eventful week for entertainment and sports: The Eid brought Arab cinema's most expensive bet to the big screen. 7 Dogs landed across Saudi, Egyptian and Gulf theaters on Wednesday, opening in more than 600 regional cinemas on a reported USD 40 mn budget that makes it the priciest Arabic-language film ever made.

ALSO- Ronaldo finally has his Saudi Pro League winner's medal, after Al Nassr's 4-1 win over Damac just before the holiday sealed the club's first league title since 2019. Ronaldo, 41, hadn't lifted major club silverware since his 2020 Serie A title with Juventus, and will be heading off to chase the one trophy still missing from his cabinet at this summer's World Cup.

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The big story abroad

The on-again, off-again US-Iran deal is back in limbo. A framework to wind down the war that looked all but done midweek wobbled over the weekend after President Trump sent tougher terms back to Tehran, reportedly balking at language that would unfreeze Iranian funds. A deal that would extend the ceasefire by 60 days and see Iran lift its blockade on the strait is “very close” but “not there yet,” VP JD Vance said, with negotiators still stuck on the enrichment question.

The military track hasn't paused for the diplomacy. Defense Secretary Pete Hegseth said the US is “more than capable” of restarting strikes if talks collapse, and US forces disabled another merchant vessel as it tried to run the blockade toward an Iranian port.

Threats were also flung against an unlikely target: Trump responded to a question about Oman and Iran jointly overseeing the strait, saying Oman would “behave just like everybody else, or we'll have to blow them up,” while the Treasury Department warned the US could “aggressively” sanction the sultanate.

The wider regional picture isn’t cooling either. Israel expanded its ground operations inGaza and struck southern Beirut over the weekend, with Prime Minister Netanyahu pressing offensives against Hamas and Hezbollah ahead of elections due by October.

MEANWHILE- Markets are partying right through everything: Brent Crude settled slightly above USD 91 on Friday, softer on the week as traders priced in the now-in-question deal. Meanwhile, US stocks closed out a record May, with the S&P 500 up 5.1% on the month and a fourth straight all-time high on Friday. The tech rally powered the rise, led by Dell which jumped 32.8% on blowout AI-demand guidance.

ALSO- Boardroom drama at BP: Ousted chair Albert Manifold says he’ll challenge theaccusations behind his abrupt exit after reports of bullying complaints. The ouster leaves the company on its third chair and third CEO in three years.

OVER IN TECH WORLD- SoftBank is planting its flag in Europe. Masayoshi Son's group pledgedup to EUR 75 bn to build what would be the continent's largest AI data-center complex in France — a 5 GW build roughly equivalent to New York City's peak demand.

AND- Anthropic became the world’s highest-valued startup after raising USD 65 bn on Thursday. We have more details in today’s Planet Finance, below.