Good morning, ladies and gents. The shift in mood is stark this morning after the overnight announcement of a two-week ceasefire between the US and Iran.

Here’s what we know: Washington will “suspend the bombing and attack of Iran for a period of two weeks” if Tehran reopens the Strait of Hormuz, US President Donald Trump said. Tehran responded by saying it would halt its attacks across the Gulf if the US and Israel stop their attacks. The Islamic Republic also said it would open the Strait of Hormuz, allowing vessels to transit the waterway in coordination with Iranian armed forces. This came hours before Trump’s deadline for Tehran to reopen the Strait of Hormuz or else a “whole civilization will die.”

What happens next? The two sides will meet on Friday to “further negotiate for a conclusive agreement to settle all disputes,” Pakistan’s Prime Minister Shehbaz Sharif said. Trump said Iran presented a 10-point proposal, which he called a “workable basis on which to negotiate.”

The question is whether the ceasefire will hold: Despite the ceasefire announcement, Saudi authorities issued a security alert to residents and activated air defenses, along with the UAE, Bahrain, and Kuwait, Reuters reports. The UAE, Qatar, and Kuwait reported a fresh round of missile attacks. A US official told the New York Times that Washington has halted strikes against Iran in accordance with the agreement shortly after the announcement.

Market reax: Oil dipped below USD 100 per barrel following the news, with Brent dropping as much as 16% to below USD 92 earlier today.

Asian markets cheered the ceasefire, with Japan’s Nikkei climbing over 5% and South Korea’s Kospi rising almost 6% in early trading. Western futures markets — in the US and Europe — also posted gains across the board.

What this means for us at home: The reopening of Hormuz means oil exports can once again start making their usual trips to their destinations, helping end one of the worst disruptions the global energy market has ever seen.

Before the ceasefire: Explosions were reported in the Jubail industrial city early yesterday morning, which authorities said were due to debris from intercepting seven ballistic missiles over the Eastern Province. Jubail is one of the largest petrochemical production hubs in the world, with an annual output of about 60 mn tons — amounting to 6-8% of global supply.

Precautions are being taken: Traffic on the King Fahd Causeway to Bahrain was temporarilysuspended yesterday morning but was later resumed. Unconfirmed media reports also said some business hubs extended their work-from-home advisories.

WEATHER- Thunderstorms, rain, and possible hail will be hitting Najran, Asir, Jazan, Baha, Makkah, and Riyadh today.

  • Riyadh: 32°C high / 18°C low;
  • Jeddah: 32°C high / 22°C low;
  • Makkah: 34°C high / 24°C low;
  • Dammam: 30°C high / 17°C low.

Watch this space

OIL — Opec’s crude output tumbled by a record 7.6 mn bbl / d (25%) in March, the largest monthly drop in 40 years, as the Strait of Hormuz’s closure choked export, Bloomberg reports. Iraq, Saudi Arabia, and the UAE saw the steepest declines, with Iraq losing 2.8 mn bbl / d, Saudi Arabia 2.1 mn bbl / d, and the UAE 1.4 mn bbl / d. Supply disruptions also hit Russia due to Ukrainian attacks on Baltic terminals.

ICYMI- Opec+ announced a 206k bbl / d production hike for May, but the increase is largely symbolic, as key nations remain unable to boost output amid the US-Iran conflict. The hike — just 2% of supply lost from the Strait of Hormuz closure — is expected to add very few barrels to the market.

SUPPLY CHAIN — Food supply chains in the Kingdom and the Gulf have remained resilient and stable without significant disruptions, BinDawood Holding CEO Ahmad Abdulrazzaq BinDawood told Al Arabiya. Although shipping costs have doubled, price increases have not exceeded 15%, he added, reassuring that the Kingdom has a 90-day strategic reserve of essential food stocks.

Acquisitions ahead: BinDawood Holding has seen a very limited impact from the war and plans to expand through acquisitions valued at SAR 1.5-2 bn to capitalize on the growth of the retail sector, BinDawood told the outlet.

We have more on the company's latest M&A moves in the news well, below.

Data point

SAR 14.7 bn — that’s the total value of consumer spending via point-of-sale (PoS) in the Kingdom in the week ending 4 April, up 13.4% w-o-w, according to the Saudi Central Bank’s latest weekly report (pdf). The recovery follows a mid-March slowdown, with the number of transactions climbing 12.1% to 246.5 mn.

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