THIS MORNING: Schools in Riyadh move online for a week

Good morning, wonderful people. We’re getting underway with a slightly slower pace than the post-long-weekend rush, and, for once, the regional escalation isn’t in the spotlight.

The forecasters are likely right on inflation. Containment is a set of policy choices, and policy choices come back around when the deficit does — defense is not getting cheaper, and subsidy settings are the easiest line in a budget to revisit. A 2027 call on Saudi prices is a call on fiscal patience.

Worth a read and a think this morning: The latest PISA findings size up Saudi students’ academic abilities against OECD averages. The report points to much of what keeps parents and teachers awake at night — 15-year-olds are struggling to reproduce what they were taught and stall the moment a problem doesn’t look like the one they practiced. We also get into students’ use of AI for their homework and their declining Arabic language skills.

We’re happy to welcome Ahmed Mohsen as a guest speaker at the 2026 EnterpriseAM Egypt Forum — the AI edition.

Ahmed Mohsen is the co-founder and CTO of MNT-Halan, one of the fastest-growing fintech platforms in the Middle East and Africa, serving over 8 mn customers across Egypt, Pakistan, Turkey, and the UAE. He leads the company’s technology strategy and architected Neuron, MNT-Halan’s proprietary core banking system, overseeing a team of more than 90 engineers building the company’s digital infrastructure. A serial entrepreneur with deep roots in cybersecurity, Mohsen also co-founded SecureMisr, one of Egypt’s pioneering cybersecurity firms, acquired by Cysiv in 2020.

Join us on 5 October in Cairo. Attendance is by invitation only, and we’ve reached full capacity.

Request your invitation here to join the waitlist.

Class dismissed

Schools in Riyadh move online for a week: Saudi authorities have shifted the capital’s schools to remote learning for a week, notifying parents by email on Sunday without giving a reason, Arab News reported, citing AFP. The move follows Houthi claims of a strike on a “sensitive site” in Riyadh, while the Saudi-led coalition said it had intercepted drones and ballistic missiles fired toward the Kingdom.

Under pressure

US advisory boutiques including Moelis, Rothschild, PJT Partners, and Evercore are struggling to meet regional headquarters requirements, with several yet to secure RHQ licenses despite maintaining offices in Riyadh, the Financial Times reports. One bank is putting its application on hold, and another is weighing whether to abandon its plans altogether. A senior banker tells the salmon-colored paper some requirements for the RHQ program — which was introduced in 2024 — are “not realistic.”

The sticking points: The program requires companies to employ at least 15 full-time staff at their Saudi regional headquarters within a year of receiving a license, including senior executives in managerial roles — a heavy fixed cost for advisory firms that run lean by design. Several boutiques are now seeking clarifications or exemptions from the Investment Ministry.

They’re not packing up their bags entirely: The Kingdom remains an important market and the firms intend to keep investing in their local operations, bankers tell the FT. “We want to continue investing in our Saudi office, just not under the RHQ program,” one banking executive says.

Why the ministry may not bend: More than 700 companies have registered under the program, exceeding the government’s 2030 target of 500. As of July, 19 financial institutions had obtained RHQ licenses, with another 30 in the pipeline.

The timing doesn’t help, either: Saudi capital markets and M&A activity weakened in 1H 2026, and bankers said the regional war has prompted the government and PIF to reassess spending priorities and turn more inward, the FT notes. Less dealflow means less reason to carry the cost of compliance.

Reining in leverage

Saudi brokerage clients will soon have to fund at least half of any margin trade in a foreign security from 1 November, and won’t be able to use margin on some of them at all. Draft rules from the Capital Market Authority — which are now out for consultation until 27 October — would set a minimum 50% client contribution on margin transactions in overseas securities and require institutions to monitor the margin periodically, according to an announcement.

Also in the draft: Suitability requirements would extend to transactions in foreign markets, with institutions assessing clients before dealing with them and repeating this process only after changes in a client’s circumstances. For overseas securities margin transactions, clients must provide at least 50% of the transaction value, with institutions required to monitor the margin periodically. Such transactions would also be prohibited for highly leveraged instruments and firms with accumulated losses exceeding 50% of capital.

Banking on the gas

Aramco has hired a banker for its gas carve-out, moving the plan toward an actual transaction. The oil giant has hired Evercore to advise on the restructuring — internally called Project Gamma — that would separate its gas operations into a standalone division, Bloomberg reports, citing people familiar with the matter. Boston Consulting Group is also advising on the restructuring, recommending the split as a way to unlock value.

Why it matters: At north of USD 100 bn, the gas unit would be worth roughly three times as much as Sabic, Aramco’s listed chemicals arm, and would be the biggest single lever in a program to monetize up to USD 35 bn of assets to fund state projects and dividend payouts. Sabic is also the cautionary reference point — its shares are down more than 20% over the past year, and that is the appetite any minority listing would be sold into.

REMEMBER- Aramco has run this structure before. Last year, a BlackRock GIP-led consortium invested USD 11 bn in Aramco’s gas-processing infrastructure at Jafurah through a lease-and-leaseback. The assets were housed in Jafurah Midstream Gas Company, with Aramco retaining a 51% stake and the consortium taking 49%, before being leased back to Aramco for 20 years.

Data point

12.8 mn bbl / d — that’s how much crude oil key Middle East producers exported in September, largely the result of increased shipments from countries such as Saudi Arabia and the UAE, Reuters reports, citing data by Kpler. This marks the highest output since the start of the Iran conflict, and is roughly 6 mn bbl / d below February’s 18.8 mn bbl / d.

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The Egyptian government locked in enough LNG and crude to carry the country through peak demand this summer, and the real question now is who pays for it and for the rebuild ahead.

PowerTrip, our new four-part signature series, follows the money behind an energy sector that went from exporting gas to importing it in just five years.

Over the four issues this autumn, we'll look at how the lights stayed on and what that cost, who will own the next generation of power, how fast renewables can really scale, and whether Egypt's claim to be the region's energy hub still holds.

Issue I lands Wednesday, 30 September, and looks at how Egypt avoided rationing this summer, how the country went from gas exporter to importer in a decade, and what keeping the lights on actually cost us.

Tap here to subscribe to the Egypt edition and get PowerTrip delivered straight to your inbox.

The big story abroad

A security development has cropped up on an unexpected front. UK authorities arrested five men suspected of planning a “major incident” near RAF Fairford, a Gloucestershire base used by the US Air Force in its strikes against Iran. US President Donald Trump said Washington collaborated with the UK to avert this attack on the base, which Iran’s Revolutionary Guard declared a legitimate target last July.

AI in the hot seat: Australian senators have called the CEOs of OpenAI and Anthropic to answer questions at an upcoming AI inquiry, triggered by the recent hack of the country’s health database by an autonomous OpenAI agent. Meanwhile, OpenAI admitted its AI models accessed public data from US government websites such as those of the Securities and Exchange Commission (SEC) and Census Bureau.

Safety is one thing — cost, another: Surging IT costs are driving US corporates toward “open” AI models they can customize and run in-house, instead of paying for premium versions of ChatGPT and Claude. Executives mentioned “open weight” or “open source” AI models six times as often in earnings calls and investor conferences in August and September compared with the same period last year, according to research platform AlphaSense.

Circle your calendar

Riyadh Season 2026 will begin on 21 October and run for 10 weeks, GEA Chairman Turki Al AlSheikh announced. Some events are planned for the seventh edition — running under the theme Big Time — including boxing, wrestling bouts, UFC competitions, and the Six Kings Slam tennis tournament. Boulevard World will also return, while Wonder Garden will offer rides and other activities.