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.