Moody’s affirms Saudi’s rating, looking past Hormuz

1

WHAT WE’RE TRACKING TODAY

PIF is mulling a new logistics champion

Good morning, wonderful people. We are back in your inbox after what we hope was a relaxing long Eid vacation for you and your loved ones.

Bad news first: The uneasy standoff between the US and Iran has not yielded a deal yet, and it’s anybody’s guess whether the fighting will continue at this point.

The good news? Moody’s gave the Kingdom’s credit a clean bill of health, citing steadier government finances and diversification efforts that keep widening the non-oil base. We have more on this in today’s news well, below.

Also in today’s issue: Aramco exited a USD 7 bn downstream partnership in Malaysia to free up liquidity, and our latest trade figures from Gastat are out. Let’s dive in.

Watch this space

PIF WATCH — The Public Investment Fund is exploring the creation of a multi-bn USD national logistics champion, unnamed sources told Bloomberg. The new entity will combine parts of its ports, rail, and shipping portfolio into a single platform that could potentially become a sizable vehicle deploying investments across the sector.

What we know so far: The proposal could eventually pave the way for external capital, with the PIF considering bringing in international investors and pursuing an IPO at a later stage. Talks remain in their early stages, with no final decisions taken on the structure of the entity or the assets that would be included.

Why it matters: The ongoing disruptions to regional trade routes highlighted the importance of the Kingdom’s alternative logistics corridors, including the Red Sea ports. The consolidated firm would work on Saudi’s supply chain network, opening new trade routes, creating new investment opportunities, reducing reliance on the Strait, and avoiding future disruptions, the business information service reported.

It’s all part of the fund’s strategy for the next five years: PIF’s 2026-2030 strategy prioritizes nurturing businesses capable of generating sustainable returns and turning portfolio companies into global champions. Priority sectors singled out for focus include logistics and infrastructure.

OIL — More price cuts for Asian-bound oil? Saudi Arabia is expected to cut July crude prices for Asian buyers by USD 3-8 / bbl, marking the second consecutive month of price cuts, according to a Reuters survey. Flagship Arab Light crude is set to come down to a premium of USD 7.5-12.5 / bbl above Dubai and Oman average quotes.

The price cuts come as the Asian spot market cools down fast. The premium for Dubai crude collapsed by nearly 40% in May, dropping to an average of USD 8.90 / bbl from over USD 13 in April.

Why this matters: The Kingdom is trying to protect its market share as major buyers pull back. Chinese refiners — our biggest customers — slashed their oil purchases in May and June after getting squeezed by poor refining margins. Meanwhile, global supply pressure is easing as the US has exported more oil to cover Middle East shortfalls, and growing hopes of a US-Iran deal to reopen the Strait of Hormuz have pushed global prices below USD 100 per barrel.

INFRASTRUCTURE — Making Riyadh cooler: Saudi is set to begin implementing the Riyadh cooling project next year, unnamed sources told Aleqtisadiah. Greece-based consulting firm Planet is appointed as a lead consultant for the project, which aims to reduce the temperatures of asphalt surfaces and building facades by 8-15 degrees across the capital.

The details: The cooling project will identify the areas most affected by rising temperatures based on factors, including building density, facade materials, and the availability of open spaces. Five pilot zones have already been selected to test and evaluate cooling solutions, the sources said. The proposed cooling methods include heat-reflective road materials, upgraded pedestrian surfaces, open water channels, evaporation ponds, and additional landscaping.

Data point

2.4% — that’s how much the Construction Cost Index (CCI) rose y-o-y in April 2026, the highest increase since Gastat started collecting data (pdf) in January 2024. Construction costs increased 2.7% y-o-y for the non-residential sector and 2.4% y-o-y for the residential sector, driven by sharp spikes in the cost of renting equipment and machinery, as well as rising labor and energy costs. On a monthly basis, overall construction costs ticked up 0.5% compared to March.

Entertainment

The holiday was an eventful week for entertainment and sports: The Eid brought Arab cinema's most expensive bet to the big screen. 7 Dogs landed across Saudi, Egyptian and Gulf theaters on Wednesday, opening in more than 600 regional cinemas on a reported USD 40 mn budget that makes it the priciest Arabic-language film ever made.

ALSO- Ronaldo finally has his Saudi Pro League winner's medal, after Al Nassr's 4-1 win over Damac just before the holiday sealed the club's first league title since 2019. Ronaldo, 41, hadn't lifted major club silverware since his 2020 Serie A title with Juventus, and will be heading off to chase the one trophy still missing from his cabinet at this summer's World Cup.

***You’re reading EnterpriseAM Saudi, your essential daily roundup of business, economics, and must-read news about Saudi, delivered straight to your inbox. We’re out Sunday through Thursday by 7am Riyadh time.

EnterpriseAM Saudi is available without charge thanks to the generous support of our friends at Tas’heel and Hassan Allam Properties.

Want to send us a story idea, request coverage, ask for a correction, or otherwise get in touch? Reach out to us on [email protected].

DID YOU KNOW that we also cover Egypt, the UAE, the MENA logistics industry, and the MENA <> India corridor?

Were you forwarded this email? Tap or click here to get your own copy of EnterpriseAM Saudi delivered every weekday.
***

The big story abroad

The on-again, off-again US-Iran deal is back in limbo. A framework to wind down the war that looked all but done midweek wobbled over the weekend after President Trump sent tougher terms back to Tehran, reportedly balking at language that would unfreeze Iranian funds. A deal that would extend the ceasefire by 60 days and see Iran lift its blockade on the strait is “very close” but “not there yet,” VP JD Vance said, with negotiators still stuck on the enrichment question.

The military track hasn't paused for the diplomacy. Defense Secretary Pete Hegseth said the US is “more than capable” of restarting strikes if talks collapse, and US forces disabled another merchant vessel as it tried to run the blockade toward an Iranian port.

Threats were also flung against an unlikely target: Trump responded to a question about Oman and Iran jointly overseeing the strait, saying Oman would “behave just like everybody else, or we'll have to blow them up,” while the Treasury Department warned the US could “aggressively” sanction the sultanate.

The wider regional picture isn’t cooling either. Israel expanded its ground operations in Gaza and struck southern Beirut over the weekend, with Prime Minister Netanyahu pressing offensives against Hamas and Hezbollah ahead of elections due by October.

MEANWHILE- Markets are partying right through everything: Brent Crude settled slightly above USD 91 on Friday, softer on the week as traders priced in the now-in-question deal. Meanwhile, US stocks closed out a record May, with the S&P 500 up 5.1% on the month and a fourth straight all-time high on Friday. The tech rally powered the rise, led by Dell which jumped 32.8% on blowout AI-demand guidance.

ALSO- Boardroom drama at BP: Ousted chair Albert Manifold says he’ll challenge the accusations behind his abrupt exit after reports of bullying complaints. The ouster leaves the company on its third chair and third CEO in three years.

OVER IN TECH WORLD- SoftBank is planting its flag in Europe. Masayoshi Son's group pledged up to EUR 75 bn to build what would be the continent's largest AI data-center complex in France — a 5 GW build roughly equivalent to New York City's peak demand.

AND- Anthropic became the world’s highest-valued startup after raising USD 65 bn on Thursday. We have more details in today’s Planet Finance, below.

Healthy

Moody’s gives the Kingdom’s credit a clean bill of health — Hormuz and all. The ratings agency affirmed Saudi Arabia’s Aa3 rating with a stable outlook last week, looking past the closure of the Strait of Hormuz to deliver a vote of confidence in our balance sheet. Aa3 is Moody’s fourth-highest investment-grade notch.

Behind the call: A large, wealthy economy sitting on cheap-to-pump crude, plus steadier government finances and diversification efforts that keep widening the non-oil base.

DATA POINT- Non-hydrocarbon revenue made up some 45% of the total in 2025, up from 36% in 2016, the agency noted.

The war still matters, but our infrastructure is safe for now. The conflict has kept Hormuz effectively shut since early March, and the base case from Moody’s sees a prolonged disruption. Still, the agency does not expect any fresh damage to our energy infrastructure, which bodes well for the Kingdom as it managed to keep crude moving through the East-West pipeline. The alternative route already carries 7 mn bbl / d, loading Red Sea terminals with about two-thirds of Saudi’s pre-conflict export levels, and Aramco is working to increase the capacity even further.

The math might actually work in Riyadh’s favor: Moody’s expected Brent crude to average USD 90-110 / bbl in 2026, a sharp increase from USD 70 before the escalation in late February. The higher oil prices could push government revenue above pre-conflict expectations, making room for spending on subsidies, support measures, and defense.

The growth picture is uglier in the near term. The agency pencils in a real GDP contraction of some 1.7% this year on a 10% drop in oil output, but expects a sharp 8% rebound in 2027 as the situation eases in the strait ad production climbs back.

REMEMBER- Gastat’s flash estimates had real GDP up 2.8% y-o-y in the first quarter, its slowest growth rate since 2Q 2024.

Debt burden stays light: Moody’s sees the government debt burden at 32% of GDP this year, inching higher to 40% over the medium term. The Kingdom had secured 90% of financing needs before the war erupted, but the door remains open if authorities “identify a need for additional financing,” according to the National Debt Management Center.

Moody’s isn’t an outlier: The affirmation follows S&P holding at A+ in March and Fitch keeping its A+ earlier this year, with all three citing the Kingdom's fiscal buffers and export workarounds.

What would move the needle: A durable easing of regional tensions could open the door to an upgrade. However, the downside scenarios include new strikes on strategic oil infrastructure, diversification stalling, or a prolonged slump in oil prices.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

Exit

Aramco is checking out of Malaysia: Saudi Aramco is offloading its 50% stake in Malaysia’s refining and petrochemicals joint venture PRefChem to partner Petronas, according to Aramco’s official statement. The Malaysian state energy firm will now own the JV in full, ending an 20-year downstream partnership in Southeast Asia.

PRefChem? It's a pair of JVs, Pengerang Refining Company and Pengerang Petrochemical Company, that run an integrated refinery and petchem complex in Pengerang, in Malaysia's southern Johor state. The refinery handles around 300k barrels a day, turning out jet fuel, gasoline and diesel, and feeds a petrochemicals plant with a nameplate capacity of roughly 3.4 mn tonnes a year.

BACKGROUND- Aramco bought in back in 2017, agreeing to put up USD 7 bn for a 50% stake, in a share purchase agreement signed during King Salman’s state visit to Malaysia. It was one of the oil giant’s biggest overseas downstream wagers at the time, with both JVs formally running by March 2018.

The official line: Aramco is framing the exit as a tidy-up of its downstream portfolio that frees up room to chase investments better suited to its strategy, according to its statement. Petronas says full control hands it more operational flexibility across its supply chain. The two add that they'll keep exploring ways to work together on crude supply, technology and product distribution.

This move comes as the war continues to drag on Asian energy market supply, with the closure of the Strait of Hormuz cutting off a chunk of the Gulf’s oil production that PRefChem relied on. This deal now allows Petronas to source non-Gulf energy and capture high regional fuel margins as well, Reuters reports. Aramco had been covering 50-70% of the complex's crude feedstock, but its own output fell by about a third in April versus pre-war levels.

Part of a trend? The move implies Aramco is ramping up its asset-monetization strategy, as it has been seeking to free up capital and intensify its efforts to unlock liquidity even before the war ignited.

ICYMI- Aramco is reportedly lining up asset sales in a privatization drive that could fetch as much as USD 35 bn in total, with the oil giant wanting to keep full control of its upstream business but willing to part with minority stakes in midstream and downstream assets.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

Trade surplus surges in March due to rising oil exports and declining imports

Saudi Arabia’s merchandise trade surplus surged by 218.9% in March, on the back of a rise in oil exports and a drop in overall imports, according to data (pdf) from the General Authority for Statistics. Merchandise exports rose by 21.5%, while imports declined by 24.8% to SAR 58 bn.

The jump in the trade surplus was directly influenced by the geopolitical risk premium, which began rippling across the energy market in March. The escalating US-Iran war and the fears of a prolonged closure of the Strait of Hormuz caused Brent crude to surge above USD 120 a barrel during the month. The rising prices alongside Saudi’s reliance on the Red Sea ports as a solution to sustain oil exports supported its trade balance and offset softer activity in non-oil exports.

The oil sector displayed a robust performance: Oil exports saw a significant increase of 37.4%, pushing the share of oil exports within the total export portfolio to 80%, up from 71% a year earlier.

Non-oil exports, including re-exports, dipped by 17.3% y-o-y during the month. Meanwhile, re-exports rose marginally by 2.5%, which was driven by a 51.1% increase in machinery and electrical equipment re-exports. The ratio of non-oil exports to imports improved to 39.3%, compared to 35.8% in March 2025.

Machinery and electrical equipment were the main contributors to non-oil exports during the period, accounting for 27.4% of the total and marking a strong 46.2% y-o-y increase. Chemical products followed, representing 20.1% of non-oil exports and declining by 39.1% y-o-y compared to last year.

On the import side, machinery and electrical equipment also held the top position, making up 30.4% of total imports and decreasing by 11.9% y-o-y compared to March 2025. Chemical products and their allied industries followed as the second most imported category at 9.9%, although this sector saw an 18.5% decline during the same period.

Who were our top trading partners? China remained Saudi Arabia’s top export destination in March 2026, receiving 14.1% of the Kingdom’s merchandise exports, followed by India (13.7%) and Japan (9.5%). The Asian country also led import sources at 26.7%, ahead of the US (8.4%) and the UAE (7.1%).

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

The Saudi debt market gathers pace for local and international funding

The sukuk market is still picking up pace, as big banks and companies rush to lock in funding.

#1- Alinma Bank raised SAR 3 bn from an SAR-denominated AT1 sukuk issuance worth SAR 3 bn. This issuance is part of its SAR 5 bn program and offers an annual return of 6.50%. The bank tapped Alinma Capital and HSBC Saudi Arabia as joint lead managers of the domestic tranche.

#2- The lender also tapped global markets to close a USD 500 mn of USD-denominated sustainable AT1 sukuk issuance. The green instruments carry a 6.625% yield, and are set to list on the London Stock Exchange.

ADVISORS-The bank tapped Abu Dhabi Islamic Bank, Alinma Capital, Arqaam Capital, ASB Capital, Citi, DBS Bank, Emirates NBD Capital, First Abu Dhabi Bank, Goldman Sachs, JPMorgan, Mashreq, Standard Chartered, and Warba Bank as joint lead managers.

#3- Corporate issues are riding the same wave: Red Sea International Company’s board approved a new SAR 300 mn SAR-denominated sukuk program. The developer intends to use the capital to support operational requirements and optimize its financing structure.

ADVISORS-The company tapped Sukuk Capital as the arranger for the program.

REMEMBER- Red Sea International had posted a net income of SAR 2.5 mn in 1Q 2026, up from a net loss of SAR 11.2 mn recorded in the same period the previous year. However, its revenue dropped around 10% y-o-y to SAR 631 mn during the quarter on the back of slower execution of projects.

Cross-border entertainment

PIF-owned entertainment firm Sela is setting up an entertainment and event organizing venture with Egypt’s Talaat Moustafa Group (TMG), under a partnership agreement inked last week, according to a company statement.

How it works: Under the agreement, Sela will manage, develop, and operate live experiences, festivals, and concerts across TMG’s properties in Egypt. The venture’s first project is The Corridor — a synchronized series of cultural and sporting events across Egypt and Saudi Arabia, including major global events planned for Egypt’s North Coast next year.

Saudi German Health board members fined over misstated revenue

The Saudi Capital Market Authority (CMA) struck 11 board and audit committee members at Saudi German Health with a total fine of SAR 18 mn, according to a Tadawul disclosure. The regulator convicted the group for manipulating the company’s financial statements between 2018 and 2021.

The details: The officials intentionally recorded some SAR 358 mn in revenues, which is higher than what the company can collect during the period. Along with the fines, they have been banned from working at any CMA-regulated company for up to a year.

AVIATION-

Saudi Arabia’s national carrier Saudia received its first Airbus A321XLR, becoming the first airline in the Middle East and Africa to operate this model, according to a press release. The new addition offers a range of up to 8.7k km and can operate flights of up to nine hours, consisting of 24 business-class suites and 120 economy seats. This delivery is part of Saudia’s order for 105 Airbus aircraft, and the airline is scheduled to receive 15 A321XLR aircraft by 2027.

Race of the AI giants

Anthropic just became the world’s most valuable AI startup. The Claude maker raised USD 65 bn in a Series H round on Thursday, valuing the company at a whopping USD 965 bn, nearly triple the USD 380 bn valuation it held back in February. The new valuation helped the company edge past rival OpenAI, last valued at USD 852 bn in March.

Who’s in? The round was led by Atimeter Capital, Dragoneer, Greenoaks and Sequoia Capital, with Coatue and Iconiq among the co-leads. Participants included Abu Dhabi’s MGX and Singapore’s Tenasek, as well as Capital Group, D1 Capital Partners, Baillie Gifford, Blackstone, Brookfield, D.E. Shaw Ventures, DST Global and Fidelity.

What’s the money for? Lots of compute, to meet what CFO Krishna Rao called a “historic demand,” after it struggled with capacity issues and resorted to capping usage during peak hours. The company also says the cash will go towards safety and interpretability research, and scaling the products customers rely on.

Follow the revenue: Anthropic says its run-rate revenue — a favorite metric for startups that calculates annual performance based on recent results — crossed USD 47 bn this month, up from USD 30 bn earlier this year and USD 10 bn in actual revenue last year. The numbers helped stoke the demand, as Anthropic had initially gone out targeting to raise just USD 30 bn from financial institutions, according to the Financial Times.

Alongside the financial backers, three of the world's biggest memory-chip makers — Samsung, Micron and SK Hynix — joined the round as strategic partners. The round also folds in USD 15 bn of previously committed money from cloud hyperscalers, including USD 5 bn from Amazon, which said in April it would put up to USD 25 bn into the company in exchange for a USD 100 bn-plus, decade-long commitment to its cloud.

Looking bubbly? The loops where the same names are showing up as buyers, sellers and shareholders are becoming a defining feature of the AI build-out, stoking fears the sector looks like a bubble waiting to burst.

Why it matters: This is likely Anthropic’s last private round before an IPO that could reportedly come as soon as this year. OpenAI, which last raised a record USD 122 bn, is preparing to file confidentially and could list as soon as September, while Elon Musk's SpaceX (now merged with xAI) published its prospectus last week and is reportedly targeting a USD 2 tn valuation while seeking over USD 75 bn.

The raise landed the same day Anthropic released Claude Opus 4.8, its newest flagship, pitched as better at agentic tasks and coding and notably more “honest.” Then there's Mythos, the cybersecurity model Anthropic has kept on a very short leash, and was described by tech pundits as uncannily good at finding and exploiting hidden flaws in software. Anthropic says a wider release is coming “in the coming weeks.”

Anthropic’s reach now extends beyond the tech landscape. Cofounder Chris Olah was invited to speak next to Pope Leo XIV in the Vatican last week on safeguarding humans in the age of AI. Olah had some stark notes, saying that AI could displace human labor on a vast scale, and the gains will be concentrated in a handful of rich nations, with no mechanism to share them yet.

TASI	11,028	+0.4% (YTD: +5.1%)
MSCI Tadawul 30	1,476	+0.4% (YTD: +6.4%)
NomuC	22,906	+0.6% (YTD: -1.7%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	52,659	-0.4% (YTD: +25.9%)
ADX	9,702	+0.5% (YTD: -2.9%)
DFM	5,758	+1.1% (YTD: -4.8%)
S&P 500	7,580	+0.2% (YTD: +10.5%)
FTSE 100	10,409	-0.2% (YTD: +4.6%)
Euro Stoxx 50	6,051	-0.1% (YTD: +4.4%)
Brent crude	USD 91.12	-1.7%
Natural gas (Nymex)	USD 3.29	+0.2%
Gold	USD 4,540	+1.0%
BTC	USD 73,999	+0.2% (YTD: -15.7%)
Sukuk/bond market index	911.67	+0.4% (YTD: -0.8%)
S&P MENA bond & sukuk	152.20	+0.2% (YTD: +0.2%)
VIX (Volatility Index)	15.32	-2.7% (YTD: +5.6%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.4% on Thursday, 21 May on turnover of SAR 11.1 bn. The index is up 5.1% YTD.

In the green: Kingdom Holding (+8.3%), Emaar The Economic City (+7.1%), and Tihama Advertising (+7.0%).

In the red: Raydan Food (-3.6%), Enaya (-3.0%), and United International Holding (-2.9%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.6% on Thursday, 21 May on turnover of SAR 25.3 mn. The index is down 1.7% YTD.

In the green: Paper Home (+9.4%), Wajd Life Trading (+8.0%), and Rawasi Albina Investment (+7.8%).

In the red: Taqat Mineral Trading (-10.0%), Munawla Cargo (-10.0%), and Qomel (-9.2%).

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.

Sections

About

Privacy & Support

Get EnterpriseAM daily