THIS MORNING: Leavin’ on a (very expensive) jet plane

Good morning, friends. It’s a rather busy Wednesday as we race towards the weekend, with a spate of energy news punctuating an otherwise war and defense-focused news cycle.

The events calendar may be thinning out as cancellations keep coming through, but the investment posture in Riyadh is waiting, not withdrawing. Investment committees want a clearer read on the security file before they put their names to anything, so diaries are being moved rather than cleared — Oxford Economics’ Akanksha Samdani makes that case in the issue below, and FII’s slide into next year is the most visible example of it.

The domestic market, for its part, is behaving as though none of this were happening. Riyadh homes keep getting more expensive a year into a policy package designed to slow them down, which says something useful about which pressures in this economy answer to the news cycle and which answer to supply.

The support arriving from allies has that same holding quality. The British fighters heading for Saudi skies are there to intercept, with the regional pact that would go further still waiting on a vote in Ankara.

A costly way out

It’s gotten a whole lot more expensive to hop on a private jet out of Saudi. A Riyadh-Geneva private jet charter that went for about EUR 60k before King Khalid International was shut on 10 October is now fetching EUR 94k, with charter prices out of the Kingdom up more than 50% and war-risk premiums stacked on top, operators and brokers tell the Financial Times. Charters to Europe are going for as much as USD 150k and even UAE hops for USD 30-50k, says EnterJets founder Charles Robinson. The airport reopened on Sunday, but flights still require GACA case-by-case permission and several international airlines remain suspended.

Part of the pressure is supply drying up as carriers pull out. “Fewer operators are willing to fly into and out of affected airports, and those who remain in the market know it,” says Robinson, with some “applying their own premium … simply because the demand is there and the competition isn’t.” Victor co-CEO Toby Edwards put the war-risk surcharge at up to USD 20k on a larger jet.

ALSO- Several western firms have approached flight brokers about moving senior teams to Dubai or back to home markets, albeit at a smaller scale than the UAE exodus during this year’s Iran strikes.

Britain’s RAF to defend Saudi

The UK is deploying RAF Typhoon fighters to help defend Saudi cities and infrastructure against Houthi drones and missiles, according to a statement from the UK Defense Ministry. The jets “will not conduct offensive strikes”; their role is interception, backed by an A400M heavy-lift transport and British advisers on the ground.

It’s the strongest backing yet from a major Western ally, coming as Saudi appeals to Washington have drawn no direct US intervention, and as Turkey’s parliament has yet to ratify the Makkah Joint Defence Agreement (MJDA). France has sent radar systems to Yanbu, the frequently targeted Red Sea port, and Egypt is due to weigh possible support in the coming days. Gulf states have voiced support for the Kingdom but stopped short of joining the war against the Houthis.

In the meantime, the Houthis haven’t let up: The Saudi-led coalition said it intercepted and destroyed a ballistic missile launched by the group towards Riyadh and subsequently destroyed its launch platform. Houthi spokesperson Yahya Saree said Saudi forces carried out 93 airstrikes and missile attacks in the past 24 hours, striking Al Jawf, Taiz, Saada, Marib, Hajjah, Lahij, Amran, and Ibb using F-15 and Typhoon aircraft.

Strait talk

HSBC Group CEO Georges Elhedery says the Strait of Hormuz “may become redundant” five years from now as the Gulf invests in alternative export routes, Reuters reports, citing the executive’s comments at the bank’s Future Forum in Dubai. About 40% of Gulf crude was bypassing Hormuz in late September, up from 17% before the war, Kpler data cited by CNBC shows.

The bypass network is taking shape: Saudi Arabia wants to pipe as much as 10 mn bbl / d of crude outside the Gulf within two to three years, up from the East-West Pipeline’s 7 mn bbl / d, Energy Minister Prince Abdulaziz bin Salman said last week. Kuwait is exploring links to the Saudi line to the Red Sea and to a UAE route to Fujairah, though neither has reached the feasibility stage. UAE-bound containers are landing at Khorfakkan and other east coast ports instead.

Refined products and LNG have far fewer ways around the strait. Refined products crossing Hormuz ran at about 677k bbl / d in late September, less than a fifth of the 3.6 mn bbl / d before the war, per the same Kpler data. Ras Laffan has no export terminal outside the Gulf for Qatar’s LNG, and moving fertilizer overland by truck is impractical at scale, our earlier analysis found.

Spot check

Aramco and its Asian buyers are at odds over this year’s spot purchases, complicating their 2027 supply agreements, Bloomberg reports, citing traders familiar with the talks. The refiners’ annual contracts commit them to buy set volumes of Saudi crude. During the Hormuz disruptions, some of that crude was bought on the spot market instead, through one-off deals. The two sides now disagree over whether those spot barrels count toward the refiners’ 2026 commitments — at least one refiner was reportedly asked to make up this year’s shortfall by committing to more crude in 2027.

Refiners are wary of bigger commitments amid shipping uncertainty. They are reluctant to accept larger volumes amid uncertainty over shipping, pricing, and future demand, according to the report. Adnoc has let some refiners count spot purchases toward their 2026 commitments, but hasn’t decided whether that will carry into 2027. Talks usually wrap up by the end of October, before buyers book January cargoes in November.

REMEMBER- Aramco has already been selling outside its usual channels: It sold about 20 mn barrels to Asian refiners in one week in September, to be transferred between tankers at sea in the Gulf of Oman, just outside Hormuz. It is also discussing 2027 terms that would load cargoes outside the strait and have Aramco ship them to Asian buyers itself.

Aramco’s first diesel shipment arrives in Syria

Syria has received its first fuel cargo from Saudi Aramco, paid for with its first letter of credit in 14 years. The tanker Starling began unloading about 63.8k metric tons of diesel at the Baniyas oil terminal on Monday, Syrian Petroleum Company (SPC) head of mooring and berthing Jamil Wahoud told state news agency Sana. The trial shipment is intended to help cover Syria’s domestic fuel needs.

Syria now has a formal banking channel for fuel imports. Syria’s central bank opened the letter of credit earlier this month with an unnamed major US bank, and SPC identified Aramco Trading as the supplier. The arrangement opens the way to wider cooperation, Wahoud said. SANA’s reports don’t give the agreement’s value, total volumes, or delivery schedule.

REMEMBER- Saudi oil has reached Syria before, as aid. Riyadh completed a 1.65 mn-barrel crude oil grant last November, with the final 1 mn barrels delivered to Baniyas aboard the Reliable Warrior.

Diesel diplomacy

The UAE, Saudi Arabia, and Bahrain have pledged diesel to France. The UAE and Bahrain will each supply 100k tons — roughly 746k barrels — a month for an unspecified period, while Saudi Arabia has pledged 95k tons monthly for October and November, with the possibility of extension, Bloomberg reports, citing the French presidency. TotalEnergies will sign a supply agreement “dedicated to France” with national oil companies, CEO Patrick Pouyanne said, adding that the arrangement would ensure the country has enough diesel this winter.

IN CONTEXT- European diesel prices have more than doubled this year. It’s trading at almost USD 200 a barrel, up from around USD 80 at the start of the year, amid the conflict in the Middle East and Ukrainian attacks on Russian refineries, Bloomberg reports. European refiners were already running near maximum capacity in late September, while Gulf diesel and gasoil exports averaged roughly a quarter of pre-war levels in August. Rising diesel prices have compounded the cost-of-living squeeze, with protests in the French capital and other cities turning violent over the weekend.

Data point

USD 141.2 bn — that’s how much Saudi Arabia held in US treasuries in August, down USD 1.2 mn m-o-m, according to the US Treasury Department. The Kingdom remained the 17th-largest holder of US debt, with USD 112.8 bn in long-term bonds, about 80% of its total holdings, and USD 28.4 bn in short-term securities, according to Argaam.

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The big story abroad

SpaceX and Tesla have set up special committees to explore a merger, Elon Musk, chief executive of both companies, said during a SpaceX earnings webcast. A deal is expected to be the largest corporate merger ever. Musk said he will not take part in the discussions because of a conflict of interest, and added that the negotiators have yet to reach an agreement.

More blockbuster moves: Blackstone and Warburg Pincus are weighing a sale of deposit network operator IntraFi in a deal that could put its worth above USD 10 bn. IntraFi runs what it calls the biggest reciprocal deposit network in the US, enabling banks to distribute client funds across multiple banks to extend federal deposit insurance to balances over USD 250k. The sale is in early stages, with Morgan Stanley and Guggenheim Securities advising IntraFi.

Netflix and chilled expectations? Netflix reported its slowest revenue jump since 2023 and forecast further slowing in 4Q, amplifying doubts about the streaming giant’s performance. Sales grew 12% y-o-y to USD 12.9 bn in 3Q, matching Wall Street expectations, while net income increased 44% to USD 3.7 bn.