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.