Building at home

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Aramco plans to store Saudi crude in Singapore and is putting together a USD 10 bn loan agreement

Good morning, friends. The thread through today’s issue is the Kingdom turning cheap domestic energy into things that never have to pass through a chokepoint.

Jafurah’s first job is substitution at home. Analysts make the case that power plants and industry will take most of the new gas, which frees up the crude currently being burned to keep the lights on. Gas exports are a question for the 2030s, and the terminal that would carry them is likely Yanbu, on the right side of Hormuz.

The trade numbers show what the current routes are costing. The surplus narrowed for a third consecutive month in August, and the sharpest fall anywhere in that release is in re-exports, down by a third on collapsing machinery and electrical volumes. Re-exports are pure logistics, which means they tell us a whole lot about what rerouting does to a transshipment business.

Compute is the other export that travels by fiber. Turner & Townsend has the Middle East as the cheapest region in the world to build data center capacity, on power and land rather than on anything clever, with Saudi Arabia mid-table at USD 10.80 a watt and both the UAE and Qatar cheaper.

A third Asian host

Aramco plans to store Saudi crude in Singapore, closer to Asian buyers, energy ministers from both countries said yesterday, Reuters reports. Storage at the Jurong Rock Caverns would start in the second half of 2027 under an MoU with Singapore’s Energy Market Authority and JTC Corp. The two sides aim to conclude negotiations within a few months, and the volume, terms, and duration haven’t been disclosed. The caverns, 150 m below Jurong Island, can hold about 9 mn barrels of crude and condensate. Bringing supply closer to key Asian markets “would strengthen the flexibility of our supply network,” Saudi Energy Minister Prince Abdulaziz bin Salman said.

Singapore would be Aramco’s third Asian host: Aramco already stores 8.2 mn barrels in Okinawa under an agreement with Japan’s JOGMEC, renewed in November 2025, and 5.3 mn barrels at South Korea’s Ulsan under a five-year agreement signed in 2023. In both, the host government has priority to buy the oil during a shortage. CEO Amin Nasser has said Aramco aims to double its international crude storage and gain access to government strategic reserves abroad.

Asian governments are rebuilding their own buffers. The region took two-thirds of its oil from the Middle East before the war, and the Hormuz disruption forced countries to draw down inventories. China, Japan, and South Korea hold large stockpiles, but most other Asian countries have thinner cushions, and Japan is in talks with regional partners to build reserves under its USD 10 bn Powerr Asia initiative, Reuters reports.

Why this matters: The caverns have a single-vessel berth, according to operator Vopak. Keeping them filled means locking up tankers at a time when supertanker earnings hit a record USD 805k a day in October.

Shoring up finances

The oil giant is also looking to borrow: Aramco is in the final stages of talks with international banks on a USD 10 bn revolving credit facility, which it aims to use to strengthen its finances as regional conflicts put crude exports at risk, Bloomberg reports, citing sources close to the talks. The agreement is expected to be signed within weeks, with pricing set at 60 basis points (bps) above the Secured Overnight Financing Rate. Lenders include Bank of China, Citigroup, HSBC Holdings, Industrial and Commercial Bank of China, JPMorgan Chase & Co., and Mitsubishi UFJ Financial Group.

Mounting capital requirements help explain the debt push. Aramco’s CEO Amin Nasser said earlier this month that “globally, the squeeze on crude oil is serious,” pointing out that the company is working on additional crude oil export routes and more storage overseas, as well as rebuilding inventories, which could take as long as two years. Aramco’s goal is to limit supply disruptions in coordination with the Energy Ministry, Nasser said.

Aramco has directly awarded some SAR 2.4 bn in contracts to pipe makers since the start of the year, about 80% of the more than SAR 3 bn they have booked in total. East Pipes Integrated has received the largest share at SAR 837 mn, followed by Arabian Pipes (SAR 770 mn), Saudi Steel Pipe (SAR 535 mn), and Nomu-listed Group Five Saudi Pipe (SAR 271 mn). About 85% of the pipe makers’ total contract value came after the war began. The orders come as Riyadh looks to move more of its crude exports away from the Strait of Hormuz. The Kingdom aims to lift its crude pipeline capacity outside the Gulf to 10 mn bbl / d within two to three years.

It all comes amid repeated Houthi strikes on Aramco infrastructure since hostilities with Riyadh escalated. Earlier this month, the group hit Aramco’s Ras Tanura refinery, its administrative building in Dhahran, and the Shedgum gas plant and Tanajib oil facility in the Eastern Province, as well as the Rabigh refinery on the west coast. The strain extends beyond Aramco. The conflict is putting mounting pressure on the Kingdom’s wider economy, with Riyadh also turning to international lenders to fortify its balance sheet.

Egypt positions itself as the Eastern Mediterranean’s energy hub, amid claims from Turkey, Israel, and Cyprus.

Issue III of Power Trip asks what that takes: Saudi and Libyan power links, the Greece-Europe green-energy highway, grid readiness, ports and supply chains shifting from efficiency to resilience.

Subscribe to the Egypt edition for Power Trip, out tomorrow, Wednesday, 28 October.

War Watch

Egypt’s House of Representatives yesterday agreed to authorize taking “the necessary measures” to support Saudi Arabia in defending its territory, sovereignty, and holy sites against “any external aggression,” according to a statement (pdf). The approval, which follows closed-session meetings held at President Abdel Fattah El Sisi’s request, could open the door to a more direct military role for Egypt in the Kingdom’s war against the Houthis.

The carte blanche authorization came as Saudi Defense Minister Khalid bin Salman, Pakistani Army Chief Asim Munir, and Turkish intelligence chief Ibrahim Kalin met Iranian security officials in Tehran for four-way talks, which all sides agreed to continue. Egypt isn’t a party to the Makkah Joint Defense Agreement that Saudi Arabia, Pakistan, and Turkey signed in August, though Cairo is reportedly mulling joining the defense pact.

Saudi-led forces destroyed two ballistic missile launch platforms in Sanaa, one of which was used to launch an attack toward Riyadh, along with five missile-storage tunnels, four ballistic missile launchers, and a missile depot. Civil Defense said debris from two intercepted missiles fell on Khamis Mushait and Ahad Rafidah, injuring two people.

Saudi forces carried out 119 airstrikes and missile attacks on Sanaa and the provinces of Al Jawf, Taiz, Saada, Amran, Ibb, and Lahj over the past 24 hours, Houthi military spokesperson Yahya Saree said yesterday. That brings the number of attacks since this round of fighting began to 3,298, he said. F-15 and Typhoon aircraft flying from the Khamis Mushait and Taif airbases carried out the airstrikes, while Saudi forces launched the missiles from Jizan, according to Saree.

The Houthis also claimed yesterday a ballistic missile strike on Riyadh’s King Khalid International Airport and drone strikes on crude pumping stations in the east and west. The coalition said separately on the same day that it had intercepted and destroyed three drones over the Riyadh and southern regions.

Aviation is bearing the brunt: Some 86% of scheduled flights at King Khalid International were canceled between 8 and 25 October, according to Cirium, and the disruption has spread nationwide to more than 7.8k flights, or 45% of all scheduled Saudi departures, with Abha losing 46.7%, Dammam 42%, and Najran all of its flights. The airport resumed operations at two terminals, though Flightradar24 data showed little traffic after the announcement.

Calendar stays and shifts

Saudi Arabia’s events calendar continues to split over the security situation. WWE still plans to hold Crown Jewel in Riyadh on 7 November, despite talent and staff concerns about traveling, Fightful reported. The plans to move forward also come as the US embassy in Riyadh ordered non-emergency government staff out and warned of potential airport attacks. The AFC Asian Cup 2027 is also going ahead, the confederation confirmed, running 7 January to 5 February across eight venues in Riyadh, Jeddah, and Al Khobar.

The Dakar Rally, however, has opted out: Organizer Amaury Sport Organisation (ASO) and Saudi Motorsport Company confirmed earlier reports that the 2027 edition was pulled from the Kingdom, citing “recent developments in the region” and calling it “exceptional and one-off,” with Dakar set to return to Saudi for its 50th edition in 2028. The event is expected to move back to Africa, opening with a European prologue in Spain or Portugal before roughly 12 stages across Morocco.

IN CONTEXT- The Future Investment Initiative, the Six Kings Slam tennis tournament, and an Al Nassr vs Al Wasl Champions League match have also been postponed or scrapped following the repeated Houthi attacks on the Kingdom.

LIV golfers press PIF for payouts

PIF is facing a severance push from a group of LIV golfers over unpaid contracts. More than 10 players, led by two-time major winner Dustin Johnson, are trying to negotiate with the PIF over LIV contracts worth more than USD 100 mn, The Athletic reports. They want what they frame as severance as the fund winds down the league it bankrolled before pulling funding earlier this year. Since then, LIV filed for bankruptcy in September.

The fund isn’t biting: The PIF sees itself as an equity investor that has stopped investing, a source briefed on its thinking said, and is not in talks with players or their counsel. A separate source said it initially offered players 2 cents on the USD to settle the unpaid contracts.

The timing matters: The players’ group surfaced just before the deadline for players to commit to a restructured “LIV 2.0,” backed by new investor BC Partners Credit, and none are expected to sign as the terms stand, a source said.

The bankruptcy route is a separate track, led by Bryson DeChambeau rather than Johnson. LIV expects those settlements to go through the courts, where players hold the top seven unsecured creditor slots and 14 of the top 30.

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The big story abroad

Microsoft is opening the exit door to more than a quarter of its staff. The software giant is offering voluntary buyouts to around 60k employees, about 27% of its total workforce of 223k, as it seeks to pay for its costly AI infrastructure push while keeping spending in check. The offer covers workers at experience level 70 or below in the US, Canada, India, and the UK.

UK Prime Minister Andy Burnham wants his country back in the European Union (EU), but not yet. Burnham said yesterday he would like to see the UK rejoin the EU in his lifetime, but ruled out reversing Brexit in the current parliament. Speaking ahead of a UK-EU summit next month, Burnham said the UK got “a harder Brexit than was proposed in the referendum campaign,” which has weakened its economy and its control of immigration. For now, he wants “practical steps” to make the current arrangement work better.

The EU is reportedly preparing to slow the flow of Chinese goods without sparking a trade war. The move is part of a wider push to shrink the EU’s trade deficit with China, which hit USD 404 bn last year. The bloc plans to cut imports from sectors including chemicals, furniture, and machinery, possibly through import caps or tariffs, with measures that may be presented as soon as 1Q 2027. The European Commission is looking to repeat its recent agreement with Beijing that capped imports of Chinese hybrid vehicles at 350k a year, a limit set high enough to keep China from retaliating.

Saudi Arabia is building its gas business at home and its LNG business abroad

Is Saudi Arabia building its biggest new gas field to export? Not for now, analysts say. Saudi power plants and industry can absorb most of the new gas. The gas also lets Saudi Arabia sell abroad crude it now burns for power: At peak, the program is expected to displace about 500k bbl / d of crude, Aramco has said, according to Reuters.

Gas exports are a later question, and the likelier exit is the Red Sea, outside Hormuz. Saudi Arabia has no LNG export terminal or cross-border gas export pipeline today. A modular terminal at Yanbu could be delivered within three to five years of an investment decision, Kate Dourian, a board member at the Energy Institute’s Middle East branch, tells us.

Jafurah is the supply end of that chain: Aramco began production in December 2025 and is targeting 2 bcf / d of sales gas by 2030, alongside substantial volumes of ethane and gas liquids, as part of an expansion that could raise its sales gas production capacity by around 80% from 2021 levels. It expects the expansion to add USD 12-15 bn in annual cashflow by 2030.

Domestic demand first

Domestic demand is expected to absorb much of the additional gas. The International Energy Agency (IEA) expects Saudi Arabia’s gas output to expand by almost 40 bcm between 2024 and 2030, while gas-to-power demand is forecast to grow by more than 40% by 2030, according to a 2025 IEA analysis (pdf). The additional gas is expected to support the shift away from oil-fired power generation and feed industrial expansion, and new AI and data center developments will add to electricity demand.

Analysts disagree on how much gas will be left over: Wood Mackenzie estimates Saudi Arabia could eventually have as much as 50 bcm of spare gas a year if production reaches 180 bcm. “This is unlikely to generate a substantial surplus given how much gas is required to displace oil from the power generation sector, and the scale of industrial growth in the Kingdom. Saudi Arabia has a huge demand capacity to absorb extra gas volumes,” Jamie Ingram, managing editor at Middle East Economic Survey (MEES), tells us.

Jafurah alone wouldn’t replace the oil still burned for power: Saudi power plants generated roughly 300 TWh from natural gas in 2025, against about 150 TWh from oil and 20 TWh from renewables, Anne-Sophie Corbeau, global research scholar at Columbia University’s Center on Global Energy Policy, tells us. Even without additional industrial and data center demand, Jafurah’s planned production wouldn’t be enough to replace the remaining oil-fired generation, she says, so Saudi Arabia would need other gas developments alongside renewables to complete the transition.

Crude freed for export

Saudi Arabia is already working to stop burning its potential exports. Its Liquid Fuel Displacement Program aims to replace more than 1 mn bbl / d of liquid fuels across electricity generation, desalination, manufacturing, and agriculture by 2030, with investment going into gas-fired power plants, fuel conversions, and renewables. Aramco’s expanding gas network is meant to supply customers that used to rely on oil, and every barrel of crude displaced from domestic consumption is potentially available for export.

Power generation is the best first use of the new gas. Combined-cycle gas plants can run at up to 60% efficiency, against about 30% for crude-fired plants, Rystad Energy says, and they supply cheaper electricity to the industries Riyadh is trying to develop. That makes domestic power the most economically attractive immediate use of additional gas, ahead of new LNG export infrastructure, Ingram argues.

Aramco can now produce gas without producing crude, which helped during the conflict. Saudi Arabia historically relied heavily on associated gas produced alongside crude oil, Dourian says. “The development of non-associated gas fields such as Jafurah gives Aramco greater flexibility because gas output is no longer so closely tied to crude production.” That mattered when Saudi Arabia curtailed oil production during the regional conflict. “Non-associated gas production has helped limit the impact on domestic gas supplies,” Dourian adds.

From field to factory

Aramco is spending USD 8.8 bn to move the gas. Phase III of its Master Gas System adds 3.1 bcf / d of transmission capacity by 2028 through roughly 4k km of pipelines and 17 gas compression trains, meant to carry additional supply to power plants and industrial customers across the Kingdom as Jafurah and other gas developments ramp up.

Contractors are building Jafurah in phases: A Hyundai Engineering and Hyundai E&C consortium has completed the first phase of its gas-processing facilities under a USD 1.6 bn contract and is working on phase two under a USD 2.3 bn award. EPC work for phase four has begun, and contractors have submitted bids for phase five. The Fadhili Gas Plant expansion, another major part of Aramco’s gas program, is scheduled for completion in 2027.

Pipelines and customers have to grow together, Dourian says. Phase III covers much of the transmission capacity the current plan requires, and growth after 2030 could need a fourth expansion alongside additional processing and liquids-handling facilities. The harder part is coordinating upstream development, transmission capacity, and new industrial customers so that gas reaches demand centers as it becomes available. “I would expect midstream capacity and the timing of downstream projects to become increasingly important considerations as production expands, rather than assuming that the availability of gas reserves will be the main constraint,” Dourian says.

Who owns the midstream

Aramco has sold investors a stake in Jafurah’s gas processing and kept control. It closed a USD 11 bn lease-and-leaseback last year. Jafurah Midstream Gas Company holds the development and operating rights to the Jafurah gas plant and the Riyas NGL fractionation facility. It leases them back to Aramco for 20 years, with a BlackRock GIP-led consortium holding 49% and Aramco holding 51% and operational control. Aramco also plans to turn its gas business into a standalone division and is weighing a minority listing. The division would cover domestic operations and international LNG, and Bloomberg reported that Evercore is advising on a structure that could value the business above USD 100 bn.

The neighbors’ head start

Aramco is building an LNG business with other countries’ gas before it has substantial domestic volumes to export. It has invested USD 500 mn in MidOcean Energy, signed long-term offtake agreements covering US LNG projects — including 1 mtpa from Commonwealth LNG in Louisiana, with an option to double that volume — and outlined an ambition to market 20 mtpa of LNG globally, with 4.5 mtpa in progress as of January. That experience could eventually support a Saudi export business if domestic production creates a surplus, Ingram says.

Adnoc and QatarEnergy already have the infrastructure and customers Saudi Arabia would need to compete with. Adnoc’s 9.6 mtpa Ruwais LNG project has committed more than 90% of planned capacity under long-term arrangements, with its first trains expected online in 2H 2028. QatarEnergy is targeting 142 mtpa of LNG capacity by 2030 through its North Field expansion, although regional conflict has damaged existing facilities and disrupted the expansion schedule. Saudi Arabia could build an export business, but it would enter a market where neighboring producers already have a head start in liquefaction, customers, and long-term contracts.

Saudi industry can compete with those neighbors before Saudi Arabia exports a cargo. Jafurah is expected to produce 420 mn cf / d of ethane and around 630k b / d of natural gas liquids and condensate by 2030, adding feedstock for petrochemicals and other industries alongside the additional sales gas. Saudi manufacturers get more access to energy and feedstock while Aramco frees up crude for export, which could strengthen their position against UAE and Qatari industries long before the first Saudi LNG cargo.

An exit outside Hormuz

Saudi Arabia would never match Qatar’s scale, but it could offer a route outside Hormuz, Ingram says. “Saudi Arabia would never be an exporter on the scale of Qatar, but what Saudi Arabia could potentially provide would be export capability outside the Strait of Hormuz on the Red Sea,” he says. Rather than matching Qatar’s liquefaction capacity, Saudi Arabia could compete by providing an alternative supply route to European buyers, he adds.

The modular terminal would give Saudi Arabia access to global markets without committing immediately to a large conventional LNG complex, Dourian says. Regional pipelines could require less capital, depending on their routes, but would offer less flexibility in reaching different customers, she adds.

Why this matters: Jafurah’s most immediate export payoff is the crude it frees up, which will put the gas division's international LNG ambitions ahead of its domestic export capacity, even as Aramco builds a business that could be valued above USD 100 bn.

Trade surplus narrows for a third straight month as exports fall

Saudi Arabia’s merchandise trade surplus narrowed for a third straight month in August, falling 21% y-o-y to SAR 15.6 bn, after declines of 25% in July and 10% in June, according to Gastat data (pdf). Merchandise exports fell 11.5% to SAR 87.2 bn, while imports declined 9.1% to SAR 71.6 bn.

Oil export value fell 12.5%, trimming oil’s share of total merchandise exports to 70% from 70.8% a year earlier. Non-oil exports, including re-exports, also fell 9.1% y-o-y, with re-exports down 34% on a 63.6% decline in machinery, electrical equipment, and parts. Non-oil exports covered 36.5% of imports, essentially flat y-o-y.

OUR TAKE- Prices moved sharply the other way over the same period, which puts the weight of the decline on volumes. Brent averaged USD 91 in August against roughly USD 67 a year earlier, so a 12.5% drop in oil export value implies crude and product volumes are down on the order of 30% y-o-y. Rerouting is doing more to trade flows than the headline surplus figure shows, meaning a further price recovery won’t repair the surplus while shipments stay constrained.

Plastics, rubber, and related products remained the largest non-oil export category at 22.6% of the total, rising 7.5%, while chemical products and related industries followed at 20.9%. On the import side, machinery and electrical equipment made up the largest share of imports at 26.2% despite a 19.8% y-o-y decline, followed by chemical products at 9.6%, up 2.7% y-o-y.

The UAE was the leading destination for Saudi merchandise exports, accounting for 11.4%, followed by South Korea at 11.2% and India at 8.4%. Japan, meanwhile, slipped from the top spot the previous month to fifth place among the Kingdom’s export destinations in August. China remained the largest source of imports at 21.9%, followed by the US at 8.4% and Egypt at 5.8%.

Gulf leads the world on data center construction costs, Turner & Townsend says

The Middle East is the cheapest place in the world if you want to build a data center, according to Turner & Townsend’s 2026 construction cost index, released yesterday. It costs an average of USD 9.93 to build one watt of tech capacity here, against USD 12.06 in North America and USD 12.76 in Europe.

BY THE NUMBERS: Saudi Arabia clocks in at USD 10.80, making it the 23rd-cheapest of 62 markets surveyed. That’s behind the UAE, which is fifth-cheapest at 9.20, and Qatar, 10th at USD 9.80. Egypt was not included in the ranking.

Building an AI data center? You’ll pay more. Facilities specifically built for AI carry a construction premium of around 10% in the US, the report estimates, in large part due to the additional cost of cooling for more intensive loads.

The cost of building in the US is also driven up by the scale of the construction boom, which is making it difficult to lock in specialized contractors to build just about anything.

The Gulf starts from a cheaper base, but the report’s regional benchmarks cover conventional, air-cooled facilities, not the more expensive liquid-cooled systems needed in much of our part of the world. The comparisons also exclude land, utility works, and the computing equipment itself — including the chips.

It’s going to come down to availability (and cost) of power: 56% of industry respondents around the world identified power as the big obstacle to wrapping up a project. Nearly a third said it takes more than two years to get connected to utilities, Turner & Townsend says.

Tadawul Group bottom line slides 42% on softer trading as Solutions holds steady

Quieter trading pulls Saudi Tadawul Group’s 3Q lower

Tadawul Group’s net income fell 41.8% y-o-y to SAR 48.1 mn in 3Q 2026, with the group flagging softer market activity that cut trading-linked income as the culprit, according to a filing on its own exchange. Revenue fell 8.1% y-o-y to SAR 292.2 mn, on a 12.5% drop in the capital-market segment and a 7.2% fall in post-trade services.

Behind the numbers: The exchange operator’s earnings track how busily the market trades, and trading cooled. The two trading-linked segments fell together, pulling trading-linked revenue down 14.6% y-o-y, while higher depreciation and amortization, the main driver of a 3.1% rise in operating expenses, deepened the hit to the bottom line.

The 9M read is much the same: Net income fell 34.6% y-o-y to SAR 195.8 mn in 9M 2026, and revenue also dropped 5.8% to SAR 909.3 mn, as an 11.1% drop in the average daily traded value weighed on trading-related income. Capital-market revenue fell 13.4% y-o-y to SAR 249.7 mn, with trading revenue down 14.4% and listing revenue 14.3%, partly offset by a 23.9% rise in membership fees. Data and technology services was the one line moving up, growing 5.8% as the group pushes to lessen its reliance on trading cycles, though not enough to offset the capital-market decline and a 5.7% fall in post-trade.

Solutions holds income steady while revenue grows

Solutions saw net income hold flat y-o-y at SAR 417 mn in 3Q 2026, according to a Tadawul filing, as a one-off SAR 30 mn early-retirement charge absorbed otherwise solid revenue growth. Stripping out that charge, net income would have grown around 5%, the company said. Revenue rose 9.6% to SAR 3.4 bn, on a 20% jump in Core ICT Services and 4.9% growth in digital services.

Over nine months net income edged up 1.4% y-o-y to SAR 1.24 bn on revenue of SAR 9.64 bn, up 9.2% y-o-y, led by Core ICT Services (up 19.8%).

Umm Al Qura sells Masar plot at over 2x book for a hospitality tower

Umm Al Qura keeps monetizing its Makkah land bank: The master developer of Masar Destination has sold a 3.2k sqm plot in the project’s Zone 3 for SAR 139 mn (USD 37 mn), more than double the land’s SAR 59.7 mn book value and roughly SAR 43k per sqm, according to a Tadawul disclosure. The seller is Al-Inma Second Development Company, the SPV of Al-Inma Makkah Development Fund II, whose units are wholly owned by Umm Al Qura. The buyer, Al Sakan Al-Mithali, a Methak Investment Holding subsidiary, plans to build a hospitality tower on the site.

REMEMBER- Umm Al Qura for Development and Construction sold multiple Masar plots in the past few weeks. It previously sold SAR 183.7 mn of Zone 2 land to Makkiyoon Urban Developers, SAR 603.8 mn of Zone 3 land to Al-Diyar Al-Arabia, and two Zone 2 plots to Al Rossais for SAR 310.4 mn.

PayTabs wants to acquire SeaPay

PayTabs is looking to buy licensed Saudi payments firm SeaPay from Arab Sea Information Systems for SAR 35 mn, according to a Tadawul disclosure. The fintech has signed a non-binding six-month MoU to acquire 100% of SeaPay. For PayTabs, a Saudi-born payments company that has grown partly by acquisition, it’s a bolt-on in a crowded local market; for Arab Sea, an IT firm, it’s an exit from payments.

Applying the tariff

Marafiq is adjusting its electricity and water tariffs from 1 January 2027, the Jubail and Yanbu utility said in a Tadawul disclosure, without giving the direction or size of the change, or its impact on the books, which it will disclose later. Shares jumped nearly 10% on the news.

IN CONTEXT- Saudi Energy Company and the National Water Company are resetting Saudi energy and water prices across Saudi Arabia. Ahead of the changes, eligible public-sector employees, retirees, and social security beneficiaries are expected to receive SAR 500 in government support.

UBS-Credit Suisse merger gets CMA nod

The Capital Market Authority (CMA) has approved the merger of UBS Saudi Arabia into Credit Suisse Saudi Arabia, according to a Tadawul announcement. UBS had agreed to acquire Credit Suisse in 2023 in an emergency rescue deal brokered by Swiss authorities, following mounting concerns over the bank’s financial stability and a loss of market confidence.

BMI sees Brent above USD 100 into 2027 as Hormuz stays commercially choked

A Strait of Hormuz that is open but commercially compromised is set to keep oil prices high well into 2027, and monetary policy tight with them, research firm BMI said at a MENA outlook webinar attended by EnterpriseAM. BMI expects Brent crude to average above USD 100 a barrel in 4Q 2026 and above USD 110 in 1Q 2027, on the assumption that Washington and Tehran reach another preliminary agreement to reopen the strait early next year. Brent would ease back toward the USD 70s later in 2027 as flows recover, though a serious escalation would push it above USD 120 and delay any normalization.

BMI maps three end-states… It sees a 40% chance a preliminary agreement holds and matures into a final settlement covering nuclear and sanctions issues; a 30% chance such an agreement decays into a “stop-start cycle” of violations and collapsed talks; and a 30% chance of escalation into high-intensity warfare. The first two paths together make a preliminary agreement the base case at 70%, most likely in 1Q 2027 (40%), against 25% for 4Q 2026 and 5% for 2Q 2027. The stop-start path is the most damaging, the agency says, as it would turn a shock that businesses still treat as temporary into a structural drag on investment, confidence, and non-oil growth.

… and two conditions for shipping to normalize under any scenario: a political agreement, then at least four weeks without a security incident, to let owners, insurers, and regulators reprice the risk. Flows then take six to 12 weeks to normalize, with tankers returning faster than LNG and container ships. On that framework, even a late-2026 deal would not deliver stable Hormuz flows before early 2027, and a slip or breakdown pushes it into the second half. Even then, BMI puts baseline traffic around 30% below pre-war levels, near 100 vessels a day.

The knock-on runs straight into rates: Higher energy prices keep inflation elevated for longer, BMI argues, forcing central banks to hold tighter and dragging on activity just as US and global bond yields are already climbing — lifting debt-service costs, slowing credit, and weakening business investment. Its base case for the Fed is two more 25 bps hikes this year, then a hold through 2027, though it says recent Fed signals have made the timing and the number less certain.

The hit won’t be distributed evenly across the Gulf: BMI forecasts the GCC economy shrinking 4.2% in 2026 before a 9.4% rebound in 2027. Saudi Arabia is set to contract an estimated 3.6% this year, with its oil sector to go down 16-17%, while Bahrain (-15.3%), Kuwait (-17.3%), and Qatar (-12.8%) will fall by double digits. The UAE is the near-term surprise, revised up to 1.6% growth for 2026 after it used its Opec exit, the Fujairah pipeline, and ship-to-ship transfers in the Gulf of Oman to lift output to a record 4 mn bbl / d.

Oman and Bahrain mark the extremes: Oman is one of only two Gulf economies BMI sees growing this year, at 3.8%, because its main oil terminal at Mina Al Fahal lies outside the strait and keeps exporting. As a result, its public debt is set to fall toward 25% of GDP by end-2027. Bahrain is the fiscal weak link, with a 2026 deficit widening to 14% of GDP, public debt pushing past 160%, debt-service already absorbing more than a third of revenue, and CDS spreads blowing out well beyond the rest of the bloc. BMI expects GCC partners to keep Bahrain funded, at the cost of politically sensitive spending cuts and new taxes.

For most of the Gulf, the cushion is the balance sheet. Outside Bahrain, BMI argues, fiscal positions are not fragile, with low debt and sovereign-wealth buffers able to absorb the shock. The likely response, it says, is a reprioritization of capital from external deployment toward domestic resilience: defence, infrastructure that cuts reliance on Hormuz, and diversification. That would ripple outward, since MENA economies that lean on Gulf investment, from Egypt to the Levant, would feel it if the money turns inward.

The spillover reaches the oil importers. Higher crude has lifted fuel and import bills across North Africa and the Levant. BMI trimmed Egypt’s FY2026/27 growth forecast to 5.0% and sees the EGP holding in a 52-57 range to the USD into 1Q 2027, cushioned by record reserves near USD 57 bn; it reads the authorities’ tolerance for a weaker currency as a sign of a more flexible regime that can absorb the shock. Lebanon, Syria, and Tunisia face the sharpest cost-of-living pressure and the social discontent that follows, while Iraq has already devalued the IQD 15.4% and turned to the IMF.

MARKETS THIS MORNING-

Asian markets were in the green earlier today. South Korea’s Kospi was up around 4% and Japan’s Nikkei was up around 2.2%. The upswing tracked overnight gains seen among most Wall Street equities.

TASI	9,762	+3.4% (YTD: -7.0%)
MSCI Tadawul 30	1,324	+3.4% (YTD: -4.5%)
NomuC	21,211	-0.8% (YTD: -9%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	48,417	-1.7% (YTD: +15.8%)
ADX	9,641	+0.5% (YTD: -3.5%)
DFM	5,752	+0.3% (YTD: -5.2%)
S&P 500	7,677	+0.7% (YTD: +12.1%)
FTSE 100	10,767	+0.7% (YTD: +8.4%)
Euro Stoxx 50	6,116	+0.8% (YTD: +5.5%)
Brent crude	USD 115.81	-0.8%
Natural gas (Nymex)	USD 2.60	-0.1%
Gold	USD 4,027	-0.3%
BTC	USD 79,951	-0.6% (YTD: -8.7%)
Sukuk/bond market index	891.01	+0.1% (YTD: -3.1%)
S&P MENA Bond & Sukuk	148.11	0.0% (YTD: -2.5%)
VIX (Fear gauge)	18.39	-5.5% (YTD: +23.0%)

THE CLOSING BELL: TADAWUL-

The TASI rose 3.4% yesterday on turnover of SAR 5.2 bn. The index is down 7% YTD.

In the green: Flynas (+10%), Saudi Fisheries (+10%), and Red Sea International (+10%).

In the red: Saudi Tadawul Group Holding (-1.9%), Al Rajhi REIT Fund (-1.4%), and United International Holding (-1%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.8% yesterday on turnover of SAR 17.9 mn. The index is down 9% YTD.

In the green: Dar Almarkabah for Renting Cars (+21.6%), Ghida Alsultan for Fast Food (+17.3%), and Aljouf Mineral Water Bottling (+13.5%).

In the red: Al Modawat Specialized Medical (-8.5%), Horizon Food (-7.9%), and Knowledge Net (-7.4%).

CALENDAR

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

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.

29 November-1 December (Sunday-Tuesday): The Global Logistics Forum, King Abdulaziz International Convention Centre, 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;

DECEMBER

14-16 December (Monday-Wednesday): The Innovation Driven Water Sustainability Conference (IDWS 2026), Jeddah

2027

JANUARY

12-14 January (Tuesday-Thursday): The Future Minerals Forum (FMF), Riyadh.

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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Today at a glance

THIS MORNING: Aramco plans to store Saudi crude in Singapore and is putting together a USD 10 bn loan agreement

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Related

This publication is proudly sponsored by

Saudi Arabia is building its gas business at home and its LNG business abroad

Related

Trade surplus narrows for a third straight month as exports fall

Related

Related

Gulf leads the world on data center construction costs, Turner & Townsend says

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Tadawul Group bottom line slides 42% on softer trading as Solutions holds steady

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Umm Al Qura sells Masar plot at over 2x book for a hospitality tower

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BMI sees Brent above USD 100 into 2027 as Hormuz stays commercially choked

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