Inflation subdued in May despite war pressures

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WHAT WE’RE TRACKING TODAY

Saudi boosts crude storage in South Korea

Good morning, all. We lead today’s issue with May’s inflation reading, which rose 1.8% y-o-y on the back of higher housing and personal care prices. Inflationary pressure is expected to ease now that the US and Iran have signed a framework agreement.

PLUS- Al Majed For Oud inked an NBO to snap up a group of healthcare, beauty, and retail assets; AI solutions startup Velents joined Anthropic’s Claude Partner Network; and KAFM DMC secured its first independent debt package.

PLUS- Why did Indian Man Industries snap up National Pipe Company?

Parking oil in Seoul

Riyadh puts more barrels closer to Asia: Saudi Arabia is expanding crude storage inside South Korea’s Strategic Petroleum Reserve — giving Seoul more supply buffer and Riyadh a stronger foothold in one of Asia’s most vital refining markets, the Arabic press reports. The two countries signed an MoU covering cooperation across oil, gas, refining, petrochemicals, energy investment, crude pipeline infrastructure, innovation, and digital transformation.

The mechanisms are simple, but the positioning matters: Saudi barrels stored in Korea can function as commercial inventory for Aramco and as emergency cover for Seoul. In 2023, Aramco inked a five-year agreement with KNOC to store 5.3 mn barrels of Saudi crude at one of KNOC’s storage facilities in Ulsan, South Korea, with the Asian country holding emergency purchase rights over the barrels.

The Kingdom is not the first Gulf producer to run this playbook: UAE energy giant Adnoc has used a similar model with KNOC — securing storage access in Northeast Asia while giving South Korea priority access during supply disruption. Kuwait has also signed a two-year agreement to store 4 mn barrels of crude at Ulsan on similar terms.

IN CONTEXT- “Producers of crude oil and condensates in the Gulf region typically have limited need for large storage capacity beyond what is required for logistical purposes,” global oil markets strategist and former Onyx Group head of research Harry Tchilinguirian previously told EnterpriseAM.

Done renting Tennis?

Qiddiya unveiled the National Tennis Center, a 30-court complex west of Riyadh built to ATP, WTA, and ITF standards. The flagship development features 33k seats across the site, anchored by a 15k-seat retractable-roof center court. Populous is the architect, and construction is already underway.

Good timing: The announcement lands just as the Kingdom’s rented tennis calendar runs dry. The WTA Finals leave Riyadh after this November’s edition, while its three-year hosting run for the Next Gen ATP Finals in Jeddah wrapped up last December. The PIF is winding down its LIV Golf financing after 2026 as it shifts toward what it calls more sustainable, high-quality assets. A permanent venue is the brick-and-mortar version of that pivot, potentially handing an obvious home to the PIF-backed ATP Masters 1000 tournament, confirmed for as early as 2028.

Saudi holds Uruguay to a draw

Saudi Arabia and Uruguay drew 1-1 in the early hours of the morning in their opening match of the 2026 World Cup. Abdulelah Al Amri opened the score before Uruguay’s Maxi Araujo tied it. The Green Falcons will face Spain on Sunday at 7pm and Cabo Verde the following Saturday.

And while we’re on the topic of the World Cup: Sports Minister Abdulaziz Al Faisal assured that the Kingdom will prioritize ticket affordability and fan safety when it hosts the 2034 World Cup. “This is something that we're going to work with FIFA on. Nobody wants to see a tournament such as the World Cup where people are struggling to come,” he told Reuters.

IN CONTEXT-This year’s World Cup tickets are the most expensive in the tournament’s history, going up to USD 33k for the final after the dynamic pricing system was implemented.

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The big story abroad

When will Hormuz reopen? That was the main question dominating the opening day of the G7 Summit in France. While US President Donald Trump seems confident that the strait will be open to all on Friday — when the US and Iran are scheduled to sign a final agreement — others are less optimistic.

Drama at the summit: G7 members are yet to find common ground on how to handle “the situation in Iran,” one G7 official told Bloomberg. With two more days to go, we’ll be closely watching for developments from the summit.

News of the US-Iran agreement is making waves across stock markets: Equities soared yesterday as the announcement reignited investor confidence — the S&P 500 jumped 1.7% and the Nasdaq Composite rose 3.1%. The rally was further supported by SpaceX’s shares rising almost 20% yesterday — their second day of trading. Meanwhile, oil prices continued their fall, with Brent dipping 4.8% to USD 83.17.

Beware the meat wall: The Wall Street Journal is out with a piece looking at a new obstacle standing in the way of the teams playing in this year’s World Cup — the Meat Wall. In this tactic players line up to form a wall in hopes of blocking corner or free-kicks, which the WSJ says has turned “the beautiful game into a wrestling match.”

Handling pressure

Headline inflation edged up slightly to 1.8% in May, matching March’s reading after a dip to 1.7% in April, according to the latest data (pdf) from Gastat. That keeps the headline figure below 2% and signals price stability is holding despite the Strait of Hormuz closure.

The budget took the hit: “A slight uptick in inflation was expected as support measures for the closure of the strait would oscillate in effectiveness.” MENA economist Hamzah Al Gaaod tells EnterpriseAM. Oil revenues earned during the closure offset the costs. “We are likely to see some of the insulation felt in government budgets and debt this year, and for bonds likely in a few years when they mature,” he added.

But the outlook is shifting: With the US-Iran framework agreement pointing toward a strait reopening, Gaaod expects inflationary pressure to ease from here. However, tail risk remains until a full agreement is sealed.

There’s a structural floor underneath: The USD peg is keeping import costs predictable, where currency swings are stoking inflation across other emerging markets, Senior Economist at MT Trading Ahmed Chreim tells us. Government price controls and subsidies on basic goods are also playing a role in curbing inflationary pressures.

The breakdown

Housing remained the main driver, adding 0.7 percentage points to the headline figure, with the housing, water, electricity, gas, and other fuels division rising 3.7% y-o-y, led by a 4.7% increase in actual rents.

Elsewhere, personal care and miscellaneous goods climbed 5.6%, driven by a 20% increase in jewelry and watch prices. Entertainment, sports, and culture costs climbed 2.6%, supported by a 4.3% rise in holiday package prices. Ins. and financial services prices also climbed 2.2% y-o-y. Restaurant and hotel services increased 1.7%, transport costs rose 1.5%, and food and beverage prices edged up 0.7%.

Two segments pushed back: Furnishings and household equipment fell 0.5% y-o-y, and clothing and footwear inched down 0.1%. Competitive retail in those categories is part of why the housing squeeze hasn't spilled into a broader wage-price spiral, Chreim argues.

ALSO- The wholesale pressure was more intense, with the wholesale price index (pdf) jumping 4.6% y-o-y in May, up from 3.3% in April. The movement was mostly driven by a 9.1% increase in other transportable goods — including a 59% spike in basic chemicals — and a 1.5% rise in metal products, machinery, and equipment.

AND- Manufacturing costs continued to climb in April. The producer price index (pdf) rose 9.1% y-o-y, accelerating from 5.5% in March, driven mainly by a 9.7% increase in manufacturing prices and a 7.7% increase in water supply, sewerage, waste management, and remediation activities.

Taking over

Luxury fragrance brand Al Majed For Oud signed a non-binding offer (NBO) to acquire a portfolio of healthcare, beauty, and retail assets across the GCC from the Al Suwaih family, according to a Tadawul disclosure. The proposed transaction carries an enterprise value of SAR 392 mn.

What’s included? The six portfolio assets include Al Safa Pharma and Medical Supplies, UAE-based Safa Al Khaleej Trading, and Qatar-based Wahat Alsafa for Trading — all 100% owned by the sellers — along with Saudi-based Natural Touch, Bahrain’s Beauty Secrets (80% owned by the Al Suwaihs), and Oman-based Al Safa National Investment (50% owned by the family).

IN CONTEXT- The NBO expands on an MoU signed with the Al Suwaih family at end-2025, which covered only Al Safa Pharma.

What’s next? The parties have six months to finalize an agreement, with the portfolio subject to restructuring pending due diligence. If completed, Al Majed would have a footprint across five of the six GCC states.

ADVISORS- Al Majed tapped GIB Capital as financial advisor, with Khoshaim & Associates providing counsel.

Why India’s Man Industries just dropped USD 102 mn in Saudi Arabia

India-based pipe manufacturer Man Industries is building Saudi Arabia into a key Gulf manufacturing base after completing its USD 102 mn acquisition of Saudi Arabia-based National Pipe Company (NPC), as local content rules, import duties, and rising energy and water infrastructure demand change how Indian industrial companies serve the Gulf markets.

From exporters to local players: The acquisition signals a structural transition from exporting pipes out of India to building heavy industrial capacity inside the Kingdom, Managing Director of Man Industries Nikhil Mansukhani, tells EnterpriseAM. “We realized that if we wanted our share of the Saudi market, we needed to be present locally. We were no longer eligible for many tenders because we were not local. Local manufacturing has become a very important criterion in Saudi Arabia,” Mansukhani says.

Why Saudi? Man Industries was a regular supplier of line pipes to the Kingdom between 2015 and 2021. However, Saudi Aramco’s in-Kingdom value-added requirements, changing localization frameworks, and a 15% import duty gradually eroded the competitiveness of direct exports from India.

The NPC’s advantage

A shortcut to Saudi approvals: Acquiring NPC gives Man Industries immediate manufacturing capability and a premium client roster that would otherwise take years to establish from scratch. Operating out of Dhahran and Dammam, NPC has an annual installed capacity of 430k metric tons of HSAW and LSAW pipes. Its existing customer base features heavyweights like Saudi Aramco, the Saudi Water Authority, the Saudi Water Partnership Company, the Water Transmission & Technologies Co., and Kuwait Oil Company.

“The biggest advantage is that NPC is already approved by Saudi Aramco,” Mansukhani says. “If we had built a new mill from scratch, we would first have had to spend around two years on construction and approvals. After that, we would need API certification, which can take six to eight months. Then we would have to conduct trials with Aramco and government clients before becoming an approved supplier.”

NPC is currently pushing through 60k tons of pipe fabrication for Aramco’s Zuluf field upgrade, with fresh orders and inquiries ongoing. Crucially, Man Industries also inherits NPC’s regulatory approvals across other key regional markets, including Oman, Qatar, Kuwait, Iraq, Abu Dhabi, and Dubai.

Order pipeline jumps: Backed by its Saudi footprint, Man Industries’ overall bid book has nearly doubled, jumping from its historical average of INR 100-130 bn to roughly INR 250 bn. The firm is already actively bidding on 8-10 major projects out of its new Saudi platform.

From pipes to coating

Before closing the NPC agreement, Man Industries had been drawing up plans for a greenfield pipe mill in the Kingdom. That capital expenditure will now be redirected toward a specialized greenfield coating and double-jointing facility, which is already under construction and slated to go live between December and January.

Why coating matters: Bare pipes and industrial coating are treated as entirely separate vendor categories under Saudi procurement protocols. “A company may be the lowest bidder for pipes but not for coating,” Mansukhani explains. NPC’s bare pipes are already approved, and the new coating facility will add another distinct revenue stream.

What comes next?

The company is eyeing a potential stainless-steel finishing facility in Saudi Arabia within 18 months. It is currently setting up 25k tons of extrusion capacity in India and plans to route material to the Kingdom to feed a planned finishing facility.

A Western export springboard: Saudi production could also help Man Industries serve markets where Indian exports face restrictions or quotas. “Saudi Arabia does not have the same restrictions or quotas in markets such as Europe and the US,” Mansukhani says.

The financial outlook: By FY 2028, Man Industries projects its Saudi business will generate an annual top line contribution of up to INR 40 bn, maintaining EBITDA margins of around 14-16%.

Saudi first, GCC later: While the Saudi asset gives Man Industries the flexibility to supply neighboring states like Jordan, Iraq, and Abu Dhabi, local Saudi demand is robust enough to fully absorb its output for the next three years. “We do not expect a practical need to go outside the Kingdom in a major way over the next three years,” Mansukhani says.

Oil and gas will remain the primary demand driver for the company in the Middle East, accounting for roughly 65-70% of regional demand, while large-scale water transmission infrastructure will make up the remaining 30-35%. Emerging segments like carbon capture and hydrogen infrastructure are also being monitored as long-term growth options.

First through the door

Egyptian-Saudi AI solutions startup Velents became the first Arab company to join Anthropic’s Claude Partner Network, gaining access to technical training, certifications, and engineering support from the AI lab behind the Claude family of models.

What’s in it for Velents? Claude, alongside other platforms, will help Velents’ clients operate more efficiently and scale faster, co-founder and CEO Mohamed Gaber tells EnterpriseAM. The company will use the partnership to support large firms in Saudi and Egypt.

REMEMBER- Velents launched the first fully integrated Arabic-speaking AI employee, Agent.sa, in October, alongside a USD 1.5 mn funding round earmarked for Arabic language model development, Agent.sa’s integration ecosystem, and private cloud infrastructure.

The bigger play — sovereign AI: The Claude partnership is one piece of a longer-term wager on locally controlled infrastructure. “What we are trying to do is that we cooperate with either regional or international firms so that we offer sovereign AI inside the governments and big entities because technology becomes something we control,” Gaber says.

The risks of overreliance are already playing out: Last week, the US government suspended all foreign access to Anthropic’s Fable 5 and Mythos 5 — abruptly cutting off customers worldwide. Anthropic complied but disputed the order, calling the security concern a narrow jailbreak replicable by other publicly available models. “When a government decided to close the technology on specific people, it was able to do that. And the companies were not able to object,” Gaber said, stressing the need for locally controlled AI infrastructure.

What’s next: Velents is targeting 4x growth this year, following a similar run last year, co-founder Abdulaziz Almuhaydib tells EnterpriseAM. The product focus is on advanced Arabic speech-to-text and text-to-speech systems — built to reduce dependence on global models. Geographically, after two years scaling in Saudi through partnerships with Red Hat and IBM, Velents entered Egypt this quarter and is planning to “focus more on the recent expansion,” Almuhaydib tells us, having already been working with Abou Ghaly, Xcite, Nafeza, and Circle K.

KAFD DMC breaks from state funding

KAFD gets a debt package

KAFD DMC lands its first SAR 12 bn debt package: King Abdullah Financial District Development and Management Company (KAFD DMC) has secured a 15-year, SAR 12 bn (USD 3.2 bn) syndicated Murabaha facility in its first independently secured debt package as it shifts away from direct state funding, according to a press release.

Why it matters: The facility will fund the ongoing development and asset enhancement of Riyadh’s primary financial district. KAFD previously announced plans for a 2026 monorail launch to improve district-wide connectivity and teamed up with Samsung last year to integrate smart city systems. The district is also working alongside international hospitality groups like Intercontinental Hotel Group (IHG) to open two new hotels by 2027.

ADVISORS- Al Rajhi Capital was tapped as the facility’s structuring advisor. Al Rajhi Bank, Saudi Awwal Bank, Saudi National Bank, Riyad Bank, Alinma Bank, Arab National Bank, and Gulf International Bank – Saudi Arabia acted as mandated lead arrangers, while Bank Albilad, Mashreqbank, and National Bank of Kuwait stepped in as bookrunners.

Riyadh Air secures landmark IATA membership

Riyadh Air successfully secured membership in the International Air Transport Association (IATA), according to a press release. The integration into IATA will allow the airline to connect with worldwide systems for ticketing, billing, and interline traffic.

ICYMI- This milestone comes as the airline launched its first domestic route linking Riyadh and Jeddah on Sunday, and five days after its first commercial international flight to London Heathrow.

Back to the future

Investors are dusting off their pre-war playbook after the US and Iran reached an interim agreement that should lead to the reopening of the Strait of Hormuz. Hedge funds are piling back into trades that worked before the conflict, buying everything from short-dated Treasuries and beaten-down Asian currencies to Southeast Asian equities and US consumer stocks, Bloomberg reports. One fund manager said the trade is to go “back to the future” with what worked before the war.

The biggest beneficiaries could be Asian: Hedge funds are turning bullish on oil-importing economies, including Japan, South Korea, and India, wagering lower crude prices will ease import bills and inflation pressures. Even instant-noodle stocks are back on investors’ shopping lists because of their exposure to palm oil prices.

Other sectors stand to gain as well: Investors are also eyeing Middle East-exposed industrials, logistics firms, and shipping companies that could benefit from a normalization of traffic through Hormuz.

Why the optimism? The agreement removes a major overhang for global markets after months of fighting triggered a massive disruption to oil supply. Brent crude fell more than 5% toward USD 82 a barrel after the agreement announcement, Bloomberg reported separately, while Treasury yields and the USD also moved lower as traders pared back expectations for future rate hikes.

A lot still hinges on inflation: “The real test now is the inflationary legacy of this war,” KCM Trade’s Tim Waterer said, while several analysts expect the agreement to trigger a short-term rally rather than a long-term one. “The big question is how quickly this oil relief translates into lower inflation and whether that opens the door for central banks to take an easier stance on monetary policy,” Waterer added.

Not everyone is convinced: The agreement still leaves major questions unresolved, including sanctions relief, Iran’s nuclear program, and the future operation of the Strait of Hormuz. While US President Donald Trump says the waterway will reopen on Friday, analysts warn traffic could take weeks to normalize and inflation expectations “won't reverse overnight,” Aberdeen Investments’ Michael Langham said.

In other words, markets may be pricing the best-case scenario. Pepperstone strategist Dilin Wu said the agreement must still survive Israeli opposition, Iranian hardliners, and a 60-day nuclear negotiation process. Stifel’s Barry Bannister also warned that while oil may fall further in the short term, the lack of detail in the agreement means the geopolitical risk premium is unlikely to disappear anytime soon.

MARKETS THIS MORNING-

Asia-Pacific markets are mixed in early trading this morning, following yesterday’s rally triggered by the announcement of a framework agreement between the US and Iran. Investors are now sitting tight awaiting a rate decision from the Bank of Japan, which is expected to raise rates to a multi-decade high when it meets later today. Japan’s Nikkei is flat, while South Korea’s Kospi is up 1.4%.

TASI	11,096	-0.1% (YTD: +5.8%)
MSCI Tadawul 30	1,479	-0.1% (YTD: +6.6%)
NomuC	22,984	-0.3% (YTD: -1.3%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	52,307	+0.6% (YTD: +25.1%)
ADX	9,805	+2.7% (YTD: -1.9%)
DFM	5,954	+3.8% (YTD: -1.5%)
S&P 500	7,554	+1.7% (YTD: +10.4%)
FTSE 100	10,431	-0.4% (YTD: +5.0%)
Euro Stoxx 50	6,229	+0.7% (YTD: +7.5%)
Brent crude	USD 81.14	+0.4%
Natural gas (Nymex)	USD 3.15	+0.2%
Gold	USD 4,338	-0.3%
BTC	USD 66,404	+1.4% (YTD: -24.2%)
Sukuk/bond market index	913.16	-0.1% (YTD: -0.7%)
S&P MENA bond & sukuk	152.49	+0.3% (YTD: +0.4%)
VIX (Volatility Index)	16.20	-8.4% (YTD: +8.4%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.1% yesterday on turnover of SAR 6.5 bn. The index is up 5.8% YTD.

In the green: Naseej (+8.7%), Flynas (+7.4%), and Saudi Cement (+7.0%).

In the red: Luberef (-4.7%), Ades (-3.9%), and Bupa Arabia (-3.7%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.3% yesterday on turnover of SAR 21.8 mn. The index is down 1.3% YTD.

In the green: Hilwa (+7.6%), Al Rashid Industrial (+6.6%), and Horizon Food (+6.2%).

In the red: Al Mohafaza for Education (-9.7%), Lime Industries (-8.1%), and Edarat (-7.1%).

CALENDAR

JUNE

21-24 June (Sunday-Wednesday): Saudi Food Exhibition and Conference, Riyadh Front Expo.

21-24 June (Sunday-Wednesday): Saudi Print & Pack, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Riyadh International Industry Week, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Saudi Plastics & Petrochem, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Saudi Smart Logistics, Riyadh International Convention & Exhibition Center.

22-24 June (Monday-Wednesday): The Future Hospitality Summit, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

AUGUST

30 August-1 September (Sunday-Tuesday): The Saudi Entertainment and Amusement Expo, Riyadh Front Exhibition and Conference Center.

31 August-3 September (Monday-Thursday): Leap Tech Conference, Riyadh Exhibition & Convention Center - Malham.

SEPTEMBER

8-10 September (Tuesday-Thursday): The WTM Spotlight Riyadh, Riyadh Front Exhibition & Conference Center (RFECC), Riyadh

15-17 September (Tuesday-Thursday) The Global AI Summit, King Abdulaziz International Convention Center, Riyadh.

23 September (Wednesday): Saudi National Day.

28 September-1 October (Monday-Thursday): The International Conference on Theory and Practice of Electronic Governance (ICEGOV), Prince Sultan University, Riyadh.

OCTOBER

12-15 October (Monday-Thursday): World Energy Congress, Riyadh.

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.

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.

25-29 November (Wednesday-Sunday): Aero Middle East and Sand & Fun, Thumamah Airport, Riyadh.

Signposted to happen sometime in 2026:

2H: Sabic’s USD 6.4 bn Fujian project in China to start production;
September: Saudi Paper and Packaging Expo, Riyadh International Convention & Exhibition Center;
November: The UN Trade and Development Global Supply Chain Forum to take place in Saudi Arabia;
November: The Esports Nations Cup, Riyadh;
The World Economic Forum’s Global Collaboration and Growth Meeting, Jeddah;
SkyMove Air Cargo MENA, Riyadh;
The Intervision international music competition will take place in Saudi Arabia.

Signposted to happen sometime in 2027:

The World Water Forum takes place in Riyadh;
The Ocean Race finishes in Amaala on the Red Sea;
Riyadh-Kudmi transmission line to be completed;
Capital Markets Forum takes place in March in Riyadh.

Signposted to happen sometime in 2Q 2027:

The Hail Region Water Networks Project is expected to be completed.

2027

FEBRUARY

1-3 February (Monday-Wednesday): Energy Regulators Regional Association annual conference, Riyadh.

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Saudi boosts crude storage in South Korea