THIS MORNING: 3Q budget performance shows non-oil carrying the revenue load

Good morning, folks. Today’s news cycle is, in many ways, about how Saudi exporters are making more from less, as pricing offsets the burden of lower volumes and impeded shipping.

This morning’s earnings batch illustrates that, starting with oil giant Aramco, which posted a strong quarter even as its facilities came under attack and production fell. Advanced Petrochemical’s netbacks, Umm Al Qura’s selling prices, and SAL’s pricing mix all held or improved, while the companies that reported lower bottom lines were impacted by volumes that couldn’t move.

The domestic private sector is the one place with no pricing power left. October’s PMI eased while output accelerated, suggesting firms are working through what they already had on the books. Input cost inflation reached its highest level since June, and the ability to pass it on fell to a nine-month low, so competition is being settled through discounting and absorbed in margins.

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WEATHER- Saudi Arabia is forecast to see above-average rainfall and temperatures around 2°C above seasonal norms from this month through January 2027, according to the National Center for Meteorology (pdf). Rainfall could range from moderate to heavy in several regions.

Oil down, deficit up

3Q budget performance numbers are out, and non-oil is doing the heavy lifting on the revenue side: Saudi Arabia recorded an SAR 84.3 bn deficit in the third quarter as oil receipts fell 23% y-o-y, pulling total revenue down 4% despite a 20% increase in non-oil income, according to a Finance Ministry report (pdf). Non-oil revenue reached SAR 142.6 bn, accounting for 55% of total receipts, while spending fell 4% to SAR 343.4 bn. The 9M deficit now stands at SAR 244.3 bn.

^^ We’ll dig into what the revenue mix and spending trends mean for the Kingdom’s fiscal trajectory in tomorrow’s issue.

War Watch

The Houthis continue to target airports and military infrastructure, claiming to have hit Dammam Airport with two drones, an early-warning radar in Jizan with a drone, and a military transport aircraft at Jizan Airport. Saudi air defenses also intercepted and destroyed a drone over Makkah, after downing two more around Riyadh, the Saudi-led coalition said.

The Houthis also escalated their strikes in Yemen, claiming to have struck Saudi-aligned forces inside Yemen, firing ballistic missiles at positions east of Al Jawf governorate and in the Ras Al Aara and Al Mudharaba areas. They said dozens were killed and wounded, including commanders.

Saudi forces strike in Yemen, Houthis say: The militia said that Saudi warplanes carried out 109 airstrikes on civilian sites in Saada, Taiz, Lahij, Al Jawf, and Hodeidah, putting the total number of Saudi airstrikes and missiles since the escalation began at 3.9k.

Kicked down the road

The Asian Football Confederation pushed back the Asian Cup in Saudi Arabia from 7 January to 23 December 2027, following consultations with the Saudi Arabian Football Federation, according to an AFC statement. The AFC said the decision followed extensive discussions in light of current developments and related logistical considerations.

The Saudi Pro League will also reschedule Matchweek 13 of the Roshn Saudi League, with new dates to be announced after reviewing the 2026-27 fixture calendar, according to a statement.

The Embassy of Japan in Saudi Arabia has also called off the Japan Festival, which was scheduled for this month, saying it was putting “the safety of all our visitors and participants above all else.” In a post on X yesterday, the embassy said it would begin preparations for next year’s festival, promising “an even more vibrant” event to “further deepen the friendship between Japan and Saudi Arabia.”

REMEMBER- The Saudi sports and entertainment calendar took a serious hit due to the ongoing regional conflicts, with the Six Kings Slam tennis tournament being pushed to December and the Dakar Rally pulling out of the Kingdom altogether. The Joy Awards, Red Sea Film Festival, and Soundstorm (MDLBEAST) have also all been pushed or canceled.

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The big story abroad

Americans are voting to decide who controls Congress in the 2026 midterms. To take both chambers from Republicans, Democrats need to flip four Senate seats and three House seats. Polls have closed in more than half the country, including most states with competitive Senate races. The newswire expects results to come in between 6pm and 1am Eastern Standard Time.

Nvidia tightens the screws on Chinese cloud customers: Nvidia has told its data center partners they must sell at least 51% of their cloud services to non-Chinese companies, the Financial Times reports, citing five unnamed sources. The move further limits China’s access to advanced US chips as the AI race between the two countries heats up. There were no such limits before. Nvidia’s sales and regional teams passed on the rules verbally instead of putting them in writing, and the rules apply to clients worldwide, not just in Asia, though only to new contracts.

Hackers hit European supermarket fridges again: Supermarkets in eight European countries are rushing to upgrade their systems after hackers cranked up fridge and freezer temperatures on Monday, forcing stores to throw out large amounts of food. The attack mirrored one that hit dozens of French supermarkets three weeks ago. The EU’s cybersecurity agency called for closer cooperation and faster information-sharing across the bloc.