Washington, Riyadh sign 30-year civil nuclear pact

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Red Sea situation worsens as Houthis hit oil tankers

Good morning, wonderful people. Today hands us a genuine landmark: the US and Saudi Arabia signed a civil nuclear cooperation deal that gives the Kingdom a pathway to enrich uranium on its own soil, a latitude Washington has denied every other Gulf partner. We have the details in today’s big story.

Also in today’s issue: Meed's read is that the gigaproject program is shifting from “build everything at once” to phased delivery — Riyadh's deadline-bound projects and the rail push are absorbing the capital while the desert megaprojects wait their turn. Earnings, meanwhile, split cleanly: the petrochemical names bled as supply-chain disruption left product unsold, while Aldrees, Tadweer, and Jamjoom turned network, export, and regional-sales strength into fatter bottom lines.

BUT FIRST- The Red Sea situation is getting even more tense. The Houthis say they struck two Saudi oil tankers, the Encelia and the Layla, saying the vessels violated the embargo they declared on the Kingdom this week. SPA confirmed the Encelia was left ablaze at the bow after an assault in the Red Sea, with all crew safe.

Tanker traffic is basically nonexistent at this point. Five tankers had already changed course in the Red Sea on Wednesday, two of them rerouting to Suez. The situation is rapidly developing and there’s no telling what will happen over the weekend.

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Global aerospace players to develop the Saudi market

Global aerospace companies are eyeing bns in Saudi aircraft transactions and developing local capabilities. Bombardier plans to invest in maintenance and engineering capabilities in Saudi Arabia, CEO Eric Martel told Al Arabiya. The company aims to make the Kingdom one of its key markets in the coming few years, supporting The Helicopter Company’s (THC) operations and expanding its own local support services and investments.

ICYMI- THC ordered 12 business jets from Bombardier, with options to acquire a further 48 aircraft, potentially expanding its fleet to 60 jets. These aircraft include the Challenger 3500, Global 5500 and Global 8000 business jets.

ALSO- Flynas ordered five A330neo aircraft and 20 A321neo jets under its existing agreements with Airbus, according to a press release. This pushes the airline’s Airbus orderbook to 235 aircraft out of a total backlog of 280 as it expands its fleet. It now has 20 confirmed A330neos and 215 aircraft from the A320 family on order, while its current fleet comprises 67 Airbus aircraft, including two A330s, four A320ceos and 61 A320neos.

Data point

2.7% — that’s how much the Construction Cost Index (CCI) rose y-o-y in June, up from 2.6% in May, according to a Gastat report (pdf). Non-residential construction costs led with a 3.1% annual increase, while residential costs rose 2.6%, driven by higher expenses for labor, energy, building materials, and equipment and machinery rentals. On a m-o-m basis, overall construction costs edged up 0.1%.

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The big story abroad

Escalations in the Red Sea and other regional geopolitical news and earnings season are keeping front pages busy. The Houthis said they hit two oil tankers in the Red Sea, with the UK's Maritime Trade Operations Center confirming a tanker was struck off Al Shuqaiq on Saudi Arabia's coast.

Brent jumped past USD 95 a barrel in the minutes after, given the important role the Red Sea has played as a workaround for Gulf crude exports while the Strait of Hormuz stays a war zone. US Centcom confirmed a 12th night of strikes on Iran the same evening, and Kuwait said it fended off an Iranian drone incursion.

Further away from home: Alphabet raised its 2026 capex guidance to USD 195-205 bn, up from USD 190 bn and well above the roughly USD 186 bn Wall Street had modeled, even as cloud revenue jumped. The market didn't love it — shares fell 4% after hours. Tesla, meanwhile, saw its adjusted earnings of USD 0.33 a share miss the USD 0.51 Wall Street expected, and the company burned USD 1.1 bn in cashflow — its first negative quarter in two years — as AI, robotics, and Cybercab spending outpaced the auto business's gains.

Washington signs a 30-year civil nuclear pact with Riyadh — and drops the no-enrichment pledge

The US and Saudi Arabia signed a civil nuclear cooperation agreement on Wednesday that hands the kingdom a pathway to enrich uranium on its own soil, a latitude Washington has refused its other Gulf partners. Energy Secretary Chris Wright and Energy Minister Prince Abdulaziz bin Salman signed the pact — a “123 agreement” under the US Atomic Energy Act — alongside a bilateral safeguards agreement, the US Department of Energy said. The deal runs 30 years and involves American firms supplying the technology and expertise to build out the Saudi program.

IN CONTEXT- Yesterday’s signature converts into binding form the Joint Declaration on the Completion of Negotiations the two governments signed during Crown Prince Mohammed Bin Salman’s November 2025 White House visit.

The agreement does not carry the “gold standard”: the binding commitment to forgo enrichment and spent-fuel reprocessing, two key steps for countries that wish to start building their own nuclear weapons. The UAE accepted exactly that in its 2009 agreement before opening Barakah, a model nonproliferation experts have long treated as the regional template. Enrichment is the fuel-cycle step that, carried far enough, yields weapons-grade material. The US-Saudi pact opens the door to a uranium enrichment facility inside the kingdom, contingent on a joint feasibility study.

What was stalling an agreement? We signed an energy cooperation roadmap earlier in May 2024, but negotiations were slow as Riyadh reportedly held back from promising that it would not enrich uranium or reprocess spent fuel. The agreement was also reportedly tied to normalization with Israel, but Washington appears to have moved on from that.

Why it matters

The reactor program just lost its central obstacle. Without a 123 agreement, US firms were barred from selling reactors or sensitive technology into the kingdom, ceding the field to France, Russia, South Korea, and China. The new agreement lets Westinghouse, Bechtel, BWXT, Centrus and other US suppliers compete for Saudi work, a market they'd otherwise have watched from the sidelines.

SOUND SMART- The 123 Agreement takes its name from Section 123 of the US Atomic Energy Act of 1954 that regulates nuclear cooperation between the US and other countries. The act requires potential US partners to meet specific requirements, including maintaining IAEA safeguards and the physical security of nuclear material, before an agreement can be finalized.

Up for grabs: The kingdom's tender for two reactors (c. 2.9 GWe) at Khor Duwaiheen, which drew a Westinghouse AP1000 bid among others but has sat without an award since 2022, now has its missing precondition.

Grid diversification is high on Saudi’s priorities. Nearly 60% of our electricity comes from natural gas and around 40% from oil, per the IEA. King Abdullah City for Atomic and Renewable Energy's program targets roughly 17 GW of nuclear capacity by 2040, about 15% of projected electricity demand. Every GW of nuclear is a barrel of crude freed for export.

What’s next?

Prepare for a fight in Congress. The agreement now goes to Capitol Hill for a mandatory review of roughly 90 continuous session days, during which lawmakers can move to block it via joint resolutions of disapproval in both chambers. Opposition surfaced within hours, but pundits don’t think there are enough votes to block the deal yet, as it needs a two-thirds majority in the House and Senate to force the Presidency’s hand.

The gigaproject slowdown is real and persisting through 1H

Saudi Arabia is shifting its gigaprojects from a “build everything at once” approach to a more phased delivery model, Meed Construction Editor Iqbal Yasir said in a webinar (watch, runtime: 1:20:02). The program is still awarding bns of USD, but the shift is who gets them. Riyadh’s deadline-bound projects and the rail push are absorbing the capital — the desert megaprojects are waiting their turn.

The reprioritization in numbers: By the end of June 2026, a total of USD 92 bn in contracts had been awarded across all five official gigaprojects — Neom, Diriyah Qiddiya, Roshn, and Red Sea Global projects — but only USD 4.5 bn of that came in 1H 2026. The slowdown has been staggered: after peaking at around USD 34 bn in 2023, awards fell 20% in 2024 before dropping a further 48% to USD 14.3 bn in 2025.

The better indicator is which clients are still awarding work. Diriyah, the historic-quarter development on Riyadh’s western edge, drew almost USD 7.2 bn of awards last year, while Neom, long the program’s largest client, drew just USD 70 mn. That hundred-to-one gap maps onto the PIF’s 2026-2030 strategy, approved in April, which concentrates gigaproject spending on delivering what is already under construction rather than launching more.

Two pressures drive this capital discipline. The first is a deliberate reordering toward deadline-bound developments the kingdom lacked when the gigaprojects launched in 2016 — chiefly Expo 2030 and the 2034 World Cup stadiums, which then-investment minister Khalid Al Falih cast last year as the more urgent claim on capital. The second is the regional war. Meed said the conflict has forced the kingdom to divert tens of bns of USD toward military and air-defense replenishment and has left foreign investors more cautious, prompting the PIF to re-examine its spending.

The industry itself is not backing away, even as costs climb. In live polls of the webinar audience, roughly half of attendees said their firms increased their focus on Saudi gigaprojects over the past year, while another 40% held it steady, with only about one in ten pulling back. On costs, about 75% reported input-price increases of up to 25% since the war began, and about 15% pegged the rise above that.

Where money is still moving points contractors in one direction. Construction and transport together account for almost 80% of all gigaproject awards since 2019, and rail has become the most protected line in the recalibration, recast by the Kingdom as economic-security infrastructure now that regional shipping routes have been disrupted. The clearest proof point is Riyadh Metro Line 7, a 65-km, 19-station line from Diriyah Gate to Qiddiya, where Meed expects an imminent award it puts at USD 13-15 bn, potentially the second-largest construction contract ever awarded in the GCC. The Qiddiya high-speed rail line’s main-construction tender is also due later this year.

What changes next is how the work gets funded. Meed expects developers to lean harder on real estate sales, the mechanism Dubai used, and to route more public infrastructure through PPP contracts. The forward pipeline still dwarfs current award levels: construction dominates at roughly USD 145 bn of long-term planned work against USD 51 bn for transport, with smaller amounts across the water, industrial, and power sectors. About USD 192 bn of gigaproject contracts sits somewhere in procurement, much of it stalled on budget decisions, which for contractors makes the pipeline a “question of timing rather than existence.”

Earnings split: Kayan and Sipchem stall on supply snarls; Aldrees, Tadweer, and Jamjoom profit

The latest batch of Saudi earnings is split in two: Petrochemical names bled, with Saudi Kayan and Sipchem sinking deeper into the red as supply-chain disruptions left product unsold and dragged volumes despite higher selling prices. By contrast, Aldrees rode a larger service station network and truck fleet, Tadweer an export push, and Jamjoom stronger Gulf and North African sales to turn top-line growth into higher bottom lines.

Aldrees grows on station and fleet expansion

Aldrees Petroleum and Transport Services posted a 28.1% y-o-y rise in net income to SAR 123.9 mn in 2Q 2026, outpacing an 18% increase in revenue to SAR 7.33 bn, it said in a Tadawul filing. Growth came from the core petrol and transport divisions, driven by more service stations in operation and a larger truck fleet. Higher income from bank deposits, sukuk holdings, and other sources added to the total.

In the first half of the year, net income rose 18.4% y-o-y to SAR 234.1 mn on revenue of SAR 14.16 bn, up 17.6%, driven by the same station and fleet expansions.

Sales volume sinks Kayan’s 2Q

Saudi Kayan Petrochemical deepened its losses in 2Q 2026, with the net loss widening 35.5% y-o-y to SAR 672.8 mn, according to a Tadawul filing. Revenue fell 10% y-o-y to SAR 2 bn, though it recovered 35% from the first quarter.

The squeeze was a volume story. Sales volumes fell 40% y-o-y in the quarter even as average selling prices ran 51% higher, with supply-chain problems cutting into quantities sold, it said in an earnings release (pdf). Higher costs for certain raw materials compounded it, roughly tripling gross loss to SAR 338.8 mn.

In 1H 2026, the net loss was near-flat, widening just 1.2% y-o-y to SAR 1.3 bn, while revenue dropped 18.6% y-o-y to SAR 3.5 bn. The second quarter carried most of the deterioration.

One line to watch: Accumulated losses reached SAR 7.2 bn by end-June, or 47.92% of the company’s SAR 15 bn share capital, inching toward the 50% level that obliges a Saudi-listed company to call shareholders together to decide whether to keep operating.

Supply chain disruptions drag Sipchem

Sahara International Petrochemical Company (Sipchem) slipped deeper into the red in 2Q, posting a net loss of SAR 591.9 mn, compared to a loss of SAR 169.2 mn in the same quarter last year, according to a Tadawul disclosure. Revenue more than halved, dropping 54.8% y-o-y to SAR 860.9 mn.

The core problem? Sipchem couldn’t sell what it made. Supply-chain problems left unsold inventory piling up, pushing revenue lower despite higher average selling prices, while costlier butane, ethylene, and propane squeezed margins further. Below the operating line, a SAR 328 mn impairment on an associate investment and a larger share of losses from equity-accounted investees compounded the hit.

The half-year results tell the same story. The company’s net loss reached SAR 807.2 mn in 1H 2026, compared to a net income of SAR 26.1 mn in 1H 2025. Revenue fell 46.1% y-o-y to SAR 2.1 bn over the same period.

Exports buoy Tadweer’s 2Q growth

National Environmental Recycling Company (Tadweer) more than doubled its 2Q bottom line, logging 154.5% y-o-y growth to SAR 21.3 mn, it said in a Tadawul disclosure. Revenue nearly tripled, climbing 183.6% y-o-y to SAR 648.29 mn as broader feedstock sourcing across Saudi Arabia’s major cities and an expanded customer base lifted sales volumes. Quantities sold rose 85% y-o-y, while export sales climbed 223% in the quarter.

The 1H read: In the first half, net income climbed 56.8% y-o-y to SAR 41.8 mn, with revenue up 130.2% y-o-y to SAR 1.1 bn.

Export growth carries Jamjoom Pharma

Jamjoom Pharma grew 2Q net income 4% y-o-y to SAR 137.6 mn, but revenue rose three times faster, up 12% to SAR 445.3 mn, it said in an earnings rele a se (pdf). While higher volumes and exports to the Gulf and North Africa drove sales growth, the gains were absorbed by commercial hiring, marketing expenses, adverse foreign-exchange shifts, and weaker joint-venture returns.

The half-year read: In 1H, net income rose 5.8% y-o-y to SAR 305.8 mn on revenue of SAR 926.7 mn, up 8.5%

FinMin raises SAR 5.3 bn in July sukuk sale

Saudi Arabia raised SAR 5.35 bn through its July domestic sukuk issuance under the SAR-denominated Government Sukuk program, according to a press release from the National Debt Management Center. The offering was split across five tranches maturing between 2031 and 2041.

Most demand went to shorter maturities: The largest tranche, which matures in 2031, totaled SAR 3.83 bn and accounted for more than 70% of the total allocation. The remaining tranches comprised SAR 515 mn due in 2033, SAR 204 mn in 2036, SAR 300 mn in 2039, and SAR 500 mn in 2041.

World Bank’s worst-case scenario for global growth is rapidly approaching

The renewed US-Iran conflict could fuel inflation and more than halve global growth. The revived inflationary pressures could push interest rates higher and slash global growth to as low as 1.3%, down from 2.9% last year, World Bank Chief Economist Indermit Gill told Reuters. The bank’s June outlook modeled three scenarios, with the worst-case assumption of the conflict lasting six months already coming close to materializing.

Global headline inflation would climb to 4.5% under this scenario. A prolonged conflict that damages the region’s oil infrastructure would also disrupt supplies of fertilizer, helium, and sulfur, worsen food insecurity, and send shockwaves through the global economy, including higher interest rates.

Developing countries that have yet to recover from the pandemic would be hit the hardest. Rising inflation could leave heavily indebted economies struggling to service their debt within months, while higher food prices and borrowing costs would squeeze spending on healthcare, education and other essential services.

Signs of strain are already emerging: Several financially strained countries asked the IMF to expand existing lending programs, while Pakistan this week requested a USD 10 bn exchange stabilization facility from the US, the newswire reports, citing a source it says is familiar with the matter. The World Bank’s June outlook showed that 32 low- and middle-income economies are already in debt distress or at high risk of falling into it, a figure Gill warned could rise if interest rates increase.

“It’s a slow-moving train wreck,” Gill said. Even countries that avoid default would be forced to sacrifice spending on education, healthcare and other long-term priorities to keep up with debt repayments, he added. World Bank data showed that the average debt-to-GDP ratio for developing economies rose to 74% in 2025 from 50-55% before Covid-19. The ratio increased to 67% from about 40% among low-income economies.

The US, China, and India are the only exceptions so far, remaining insulated from the conflict due to their economic resilience buffers, while developing countries are being challenged by more difficult risks. The G20 countries made efforts to improve the global debt restructuring framework, despite the reforms being slow so far.

Looking ahead, AI can become key for developing economies to become more resilient, supporting their evolution even more than advanced economies, Gill said. A World Bank analysis found that AI is likely to negatively affect only around 10% of people in poorer countries, compared with 30-40% in wealthier economies. “AI can be a huge gain for them,” Gill said, adding that developing countries should be more optimistic about the technology’s potential than advanced economies, even if any boost to economic growth takes over a decade to materialize.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with Japan’s Nikkei up 0.9% while Hong Kong’s Hang Seng is down 0.1% and the Shanghai Composite is down 0.2%. Meanwhile, Wall Street futures are leaning towards the green as investors anticipate fresh earnings and weigh oil price trajectory.

TASI	10,775	+0.7% (YTD: +2.7%)
MSCI Tadawul 30	1,448	+1.1% (YTD: +4.4%)
NomuC	22,030	-0.7% (YTD: -5.4%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	53,932	-0.1% (YTD: +28.9%)
ADX	9,771	-0.1% (YTD: -2.2%)
DFM	5,785	-0.5% (YTD: -4.3%)
S&P 500	7,499	-0.1% (YTD: +9.6%)
FTSE 100	10,717	+1.2% (YTD: +7.9%)
Euro Stoxx 50	6,312	+0.5% (YTD: +9.1%)
Brent crude	USD 95.72	+1.8%
Natural gas (Nymex)	USD 2.96	+1%
Gold	USD 4,133.5	-0.4%
BTC	USD 65,884	-0.8% (YTD: -25.8%)
Sukuk/bond market index	905.38	+0.5% (YTD: -1.5%)
S&P MENA Bond & Sukuk	150.6	-0.2% (YTD: -0.9%)
VIX (Volatility Index)	16.64	-2.4% (YTD: +11.3%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.7% yesterday on turnover of SAR 3.8 bn. The index is up 2.7% YTD.

In the green: Raoom (+9.7%), Kingdom Holding (+7.3%), and Care (+5.4%).

In the red: East Pipes (-10.0%), Saudi Fisheries (-5.9%), and Mutakamela (-3.6%).

THE CLOSING BELL: NOMU-

The NomuC is down 0.7% yesterday on turnover of SAR 6.6 mn. The index is down 5.4% YTD.

In the green: Rimath (+4.8%), Alrashid Industrial (+3.0%), and First Avenue (+2.6%).

In the red: Albabtain Food (-10.0%), Ladun (-9.3%), and Anmat (-7.0%).

CALENDAR

AUGUST

30 August-1 September (Sunday-Tuesday): Saudi Paper and Packaging Expo, Riyadh International Convention & Exhibition Center.

31 August-3 September (Monday-Thursday): Leap Tech Conference, Riyadh Exhibition & Convention Center - Malham.

SEPTEMBER

8-10 September (Tuesday-Thursday): The WTM Spotlight Riyadh, Riyadh Front Exhibition & Conference Center (RFECC), Riyadh.

15-17 September (Tuesday-Thursday) The Global AI Summit, King Abdulaziz International Convention Center, Riyadh.

23 September (Wednesday): Saudi National Day.

28 September-1 October (Monday-Thursday): The International Conference on Theory and Practice of Electronic Governance (ICEGOV), Prince Sultan University, Riyadh.

OCTOBER

25-26 October (Sunday-Monday): The Global Proptech Summit, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

26-28 October (Monday-Wednesday): ACHEMA Middle East, Riyadh International Convention & Exhibition Center.

26-29 October (Monday-Thursday): The Future Investment Initiative, King Abdulaziz International Conference Center, Riyadh.

28-29 October (Wednesday-Thursday): Procurement and Supply Chain Futures Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

28-29 October (Wednesday-Thursday): Real Estate Supply Chain Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

30 October-1 November (Friday-Sunday): The New Global Sport Conference, Sofitel Hotel & Convention Centre, Riyadh.

NOVEMBER

11-12 November (Wednesday-Thursday): Aluminum Arabia, The Arena, Riyadh.

16-19 November (Monday-Thursday): Cityscape Global, Riyadh Exhibition and Convention Centre (Malham), Riyadh.

29 November-1 December (Sunday-Tuesday): The UN Trade and Development Global Supply Chain Forum, Riyadh.

Signposted to happen sometime in 2026:

2H: Sabic’s USD 6.4 bn Fujian project in China to start production;
November: The Esports Nations Cup, Riyadh;
The World Economic Forum’s Global Collaboration and Growth Meeting, Jeddah;

2027

FEBRUARY

1-3 February (Monday-Wednesday): Energy Regulators Regional Association annual conference, Riyadh.

MARCH

21-25 March (Sunday-Thursday):The World Water Forum, Riyadh.

22–24 March (Monday-Wednesday): Capital Markets Forum, Four Seasons Hotel, Riyadh

APRIL

26-29 April (Monday-Thursday): World Energy Congress, Riyadh.

JUNE

1-3 June (Tuesday-Thursday): The Saudi Entertainment and Amusement Expo, Riyadh Front Exhibition and Conference Center.

Signposted to happen sometime in 2027:

The Ocean Race finishes in Amaala on the Red Sea;
Riyadh-Kudmi transmission line to be completed;
Aero Middle East and Sand & Fun takes place in Thumamah Airport, Riyadh.

Signposted to happen sometime in 2Q 2027:

The Hail Region Water Networks Project is expected to be completed.

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