THIS MORNING: Saudi looks to plug shipping ins. gap with state backing

Good morning, folks. Today, we bring you two major updates from France: the key agreements from the crown prince’s visit to Paris, and a look back at the conclusion of the Esports World Cup held in the French capital. Next, we look at market expectations for the CMA's new leadership. Finally, we head to Rabigh Refining, where a new CEO is taking the helm.

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Saudi mulls state-backed ins. cover for ships

Saudi Arabia is exploring a state-backed war and political risk ins. pool to cover ships in the region, with early talks underway with London brokers, the Financial Times reports, citing sources it says are familiar with the matter. The plan responds to a market where ins. players have raised prices, restricted coverage, and in some cases refused to sell war cover for vessels transiting chokepoints including the Red Sea. Underwriters have also grown warier of Saudi-linked ships as Houthi attacks escalate, treating them more like high-risk Israeli and US assets.

How it would work: The Finance Ministry is considering a scheme offering up to SAR 700 mn in commercial cover per insured event, such as a ship seizure or missile strike. Ins. and reins. companies would provide the initial cover, supported by hundreds of mns of USD in additional backstop capacity per insured entity from the Saudi Export-Import Bank. One version of the proposal would see Saudi Re and Riyadh Re leading a consortium of reinsurers that could include international firms. The terms and the government’s exact share of the risk are still being negotiated and could change or collapse.

The pool would cover an increasingly blurred risk, giving shipowners access to broader cover for war, political violence, and terrorism — risks that are typically insured separately. That matters more as Houthi attacks blur the line between war and terrorism, leaving shipowners unsure what their policies actually cover, said Maximilian Hess of Enmetena Advisory.

The bigger issue is keeping trade moving. As Saudi shifts more exports toward Yanbu while both of its main maritime routes face disruption, a state-backed pool could give shipowners enough certainty to keep using those routes without ins. costs becoming a deterrent. Hess doesn’t see a market in crisis but said a pool could keep cover available at rates that don’t dent project economics or investment decisions.

Trouble off Yanbu

Houthis attack Bahri ship? A vessel belonging to the National Shipping Company of Saudi Arabia (Bahri) was involved in a “security incident” in the Red Sea yesterday, the company said in a statement. Bahri said that all crew members aboard the Amzan were unharmed. The statement follows claims by Yemen’s Houthis that they targeted a vessel off Yanbu’s coast, matching a report from the United Kingdom Maritime Trade Operations of a strike 63 nautical miles west of the port city.

The Iran-aligned militia announced a naval blockade on Saudi Arabia late last month, putting pressure on Saudi exports via Yanbu, which effectively became the Kingdom’s only working export corridor, carrying 92% of June’s seaborne crude exports and 78% of July’s. Due to Houthi pressure, six Bahri-operated Saudi supertankers returning from Asia have diverted around southern Africa earlier this month to bypass the Red Sea and Bab Al Mandab Strait.

Destination Sahel Issue IV, the final issue in the series, drops this week, and we’re exploring how Egypt’s North Coast could become more than a summer story.

Living in Sahel year-round is moving from a seasonal idea to a serious question; an industrial push is reshaping the Coast’s economic base, and Egyptian homebuyers are weighing Sahel against Dubai, London, and other Mediterranean markets for where to put their money.

In this issue, we get into what it would take for Sahel to work beyond the summer, how industry fits into the Coast’s next chapter, and the numbers behind the Sahel-vs-everywhere debate.

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A wider deficit

Fitch Solutions’ BMI expects MENA’s aggregate fiscal deficit to widen to 6.2% of GDP in 2026, up from a previously forecast 5.7%, before narrowing to 4.3% in 2027 as oil and non-hydrocarbon revenues recover, Arab News reports.

Hydrocarbon exporters: The fiscal shortfall among oil and gas exporters is forecast to widen to 5.4% of GDP this year from 4.5% in 2025, while the deficit among hydrocarbon importers is expected to increase to 5.7% from 5.1%. BMI raised its 2026 regional deficit forecast after cutting its Brent oil price assumption to USD 84 a barrel from USD 88.

The Kingdom has limited the impact of lower export volumes by rerouting an estimated 60-70% of its oil exports through the East-West pipeline, BMI noted. However, it expects Saudi Arabia’s fiscal deficit to widen to 5.9% of GDP in 2026 as higher capital spending absorbs the revenue gains. Separately, BMI forecasts the Saudi economy to contract 1.3% this year before growing 7.6% in 2027.

But an improving fiscal deficit doesn’t necessarily mean financing pressures, as we flagged before that higher US Treasury yields are, in turn, pushing up borrowing costs and Saudi yield spreads, while higher oil prices have partly offset weaker oil revenues. Rising spending needs, however, remain a source of pressure. The full cost of the conflict isn’t captured by deficit figures alone, including war-risk premiums and the cost of rerouting shipments around Red Sea chokepoints. This means improving fiscal balances may not fully reflect the economic and financial pressures created by the conflict.

Uneven impact: Other countries in the region are expected to face the sharpest deterioration, because of their exposure to Strait of Hormuz disruptions and limited ability to reroute exports. Kuwait is forecast to record the GCC’s widest deficit at 18.9% of GDP in the fiscal year ending March 2027, while Qatar’s deficit is expected to widen to 4.5% of GDP and Bahrain’s to 8.4%.

Oman bucks the trend, as it is expected to shift from a fiscal deficit of 1.1% of GDP in 2025 to a 2.1% surplus this year after rerouting all of its hydrocarbon exports and increasing production 18.8% in 1H 2026. Algeria’s deficit is also expected to narrow, while Libya is forecast to return to surplus.

Debt pressure: Regional government debt is forecast to rise to 50.2% of GDP in 2027 from 47.8% in 2025 as higher-for-longer interest rates keep debt-servicing costs elevated. BMI now expects the US Federal Reserve and GCC central banks to leave rates unchanged in 2026, with conflict-related inflation delaying monetary easing.

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The big story abroad

Washington has announced its latest attempt to squeeze Iran’s economy. Operation Economic Outcast includes sanctioning more than 60 entities, individuals, and vessels on a global level. Secondary sanctions may target entities doing business with Iran across several sectors, Treasury Secretary Scott Bessent said, warning Tehran’s trade partners to sever ties or face being expelled from the USD-based financial system.

Iran’s response? Tehran threatened military action and further cuts to Gulf oil exports before the US sanctions announcement, but Economy Minister Ali Madanizadeh later said the country was “fully prepared.” An IRGC spokesperson warned Iran would strike US vital interests and energy chokepoints if its infrastructure is threatened.

Washington’s ire toward Ottawa is also making waves, as US President Donald Trump threatened to raise tariffs on Canadian cars to 50% by 1 January and lock existing steel levies at the same rate. Last-minute trade talks collapsed over the weekend, triggering a new wave of US tariffs on USD 20 bn worth of Canadian goods and reigniting a trade war between the two nations.

A hedge fund under the microscope: The US Securities and Exchange Commission subpoenaed major Wall Street banks over trading activity at AI-focused hedge fund Situation Awareness. The fund narrowly avoided collapse after last month’s tech sell-off by selling the majority of its holdings to Citadel — a US hedge fund — in just 24 hours. The regulator will look into the timing of trades between Situation Awareness and its lenders, including Goldman Sachs, JPMorgan, Citigroup, and Bank of America.