One hub can’t carry the Gulf anymore, Saudi emerges as a safe ground

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WHAT WE’RE TRACKING TODAY

War claims its first victims in Saudi

The human toll is rising fast amid relentless attacks across the region. Some 1.2k people were killed in Iran, along with more than 300 in Lebanon, some 17 people in the GCC, and over 10 in Israel.

… and the war claimed its first casualties in the Kingdom yesterday, when a projectile struck a residential area in Al Kharj belonging to a maintenance and cleaning company. Two residents of Indian and Bangladeshi nationalities were killed, while all 12 of the wounded are Bangladeshi residents. Air defenses neutralized waves of attacks yesterday, downing tens of drones north and east of Riyadh and targeting the Shaybah oil field.

MARKET WATCH — TASI continues to defy regional jitters to close in the green, closing up 2.14% yesterday on the back of strong gains for Aramco — the highest daily gains in four years. Yanbu National Petrochemical also jumped some 10%.

Aramco’s rise comes as crude surges above the USD 100 / bbl mark as the blockage tightens. Brent crude was going for USD 117 / bbl in early trading this morning. Hormuz is effectively closed to tankers, and the region is already feeling the brunt of this, with Iraq cutting its oil production by 60% due to export disruptions.

Regional supply chains are grappling with operational bottlenecks, with the UAE and Kuwait following in Iraq’s footsteps, while Saudi Arabia is diverting crude to the Red Sea to bypass the chokepoint. Last week alone, crude oil prices surged 30% — their biggest jump in six years.

The impact is being felt more acutely in import-reliant Asia and Europe, where jet fuel prices have hit an all-time high. Analysts at ING Groep NV warn that a full three-month disruption could send oil prices to record levels through 2Q, as shipowners demand full naval escorts.

Intensive Israeli attacks on oil depots and pipelines sent up clouds of dark smoke in Tehran’s skies yesterday and the day before, prompting an Iranian military spokesperson to threaten targeting oil fields all across the region — an apocalyptic scenario for oil prices.

DIPLOMACY — US orders KSA-based diplomats to depart: Employees of the US diplomatic mission in the Kingdom have been ordered to leave by the State Department, the New York Times reports, citing current and former US officials. This marks the first mandatory departure order in Saudi Arabia since the outbreak of hostilities late last month.

Washington shuttered its embassy in Saudi Arabia last week. The US mission strongly urged Americans in the country to depart via commercial flights earlier this week.

REGULATION WATCH — The Capital Market Authority (CMA) has approved the establishment of simplified investment funds (SIFs), it said in a statement. The CMA will regulate the offerings of these funds to institutional clients and provide flexibility in determining the key provisions governing the contractual relationship between fund managers and unitholders.

SIFs allow fund managers and unitholders to set their own contractual terms, including liquidation rules, unit classes, and reporting policies, thereby cutting costs and boosting flexibility — they are modeled after limited partnership structures already in use globally. We dive deeper into the launch of SIFs in our previous coverage of the news — check it out here.

Data point

16 — that’s Saudi Arabia’s ranking among the world’s largest economies by purchasing power parity (PPP), with a GDP of about USD 2.9 tn, topping the Middle East, according to a Visual Capitalist report, citing International Monetary Fund data. Within the region, Egypt follows in 18th place globally with about USD 2.5 tn.

SOUND SMART- PPP adjusts GDP for differences in local price levels, which often makes lower-cost economies appear larger compared to advanced economies. By contrast, nominal GDP uses market exchange rates, meaning currency depreciation can lower a country’s nominal GDP ranking even if its real production remains stable.

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The big story abroad

Leading today’s global news cycle is the appointment of a new supreme leader in Iran. Mojtaba Khamenei — Ayatollah Ali Khamenei’s son — is taking on the role after the killing of his father, according to Iranian state media. The decision was taken by a group of clerics known as the Assembly of Experts. US President Donald Trump had previously characterized the appointment of the former supreme leader’s son as “unacceptable.”

The end of the single hub strategy for Gulf business?

The calculus for operating in the Gulf could be shifting — in favor of Riyadh. Ongoing strikes against ports and airports, coupled with the threat to the Strait of Hormuz, are exposing structural vulnerabilities in logistics and financial frameworks. Saudi Arabia, on the other hand, is quietly cementing its position as the region’s operational and logistical safe haven.

The result? The era of relying on a sole entry point to the Middle East is probably coming to an end. Maintaining a genuine, scaled presence in Saudi Arabia is increasingly becoming a critical requirement for business continuity, not just about appeasing government procurement mandates.

What happened

Real estate and tech in the UAE could take a hit. Dubai’s real estate engine “would face a slowdown if foreign buyers lose confidence in the safety of the location,” Ralf Wiegert, head of MENA economics at S&P Global Market Intelligence, tells EnterpriseAM. While the UAE’s rapidly growing AI sector should remain operational despite hardware supply disruptions, negative sentiment “could still impact investment decisions, notably for new projects and facilities,” Wiegert said.

Banking is also an area to watch: The UAE and Qatar are structurally “more vulnerable than the rest of the Gulf Cooperation Council to liquidity strains given their elevated reliance on both foreign liabilities for funding and interbank liabilities,” Director of Country Default and Banking Risk at S&P Alyssa Grzelak notes. Still, regional interbank offered rates do not signal significant liquidity strains.

“Saudi banks are also very resilient, and although the sector’s reliance on foreign liabilities has increased... it remains much lower than in the UAE and Qatar, and much of this has come in the form of longer-term debt, limiting immediate rollover risks,” Grzelak added.

Why this matters

No one is seeing a panicked exodus of capital or talent from Dubai or elsewhere. Most investors will take a wait-and-see approach to Middle East funding, with risks of liquidity outflows becoming more acute the longer Iranian strikes continue, Grzelak said.

BUT- The longer the disruption lasts, new facilities and fresh capital injections could start looking at Riyadh’s almost untouched infrastructure as the safer wager.

So far, the corporate response has been hesitant. “It will depend on the duration of the conflict. For now, we don’t see companies moving their activities, but opting for optional work-from-home policies,” Jaap Meijer, head of research at Arqaam Capital, tells EnterpriseAM.

The more likely scenario? Accelerating the road to the dual-hub reality. Instead of one-way capital migration, “the practical outcome is a multi-hub model: meaningful presence in both the UAE and Saudi Arabia, aligned to where demand, regulation, and talent best fit their strategy,” Meijer notes.

Companies were already setting up fully functional bases in more than one place:

Visa recently restructured its Middle East operations, keeping its Dubai office to oversee the UAE, Kuwait, and Qatar while opening a Riyadh-based office to manage Saudi Arabia, Bahrain, and Oman;
Luxury retailer Chalhoub Group recently launched a new distribution center in Riyadh while deliberately maintaining its Dubai Jafza base to strategically split inventory;
Jingdong Property mirrored this move, acquiring a new facility in Jafza while simultaneously developing a Grade-A warehouse in Riyadh;
DHL Supply Chain is executing the same playbook, funding concurrent expansions in both Dubai South and Riyadh to stay ahead of regional capacity constraints.

For these companies, a dual-hub structure is an operational ins. policy. If a bottleneck hits Jebel Ali or airspace restrictions snarl logistics in one place, having a fully functional secondary base in the other ensures regional trade doesn’t stop.

The context: Riyadh’s value proposition has been growing on its own merits following a series of market reforms.

Fertilizers: Another commodity susceptible to regional escalation

Yes — Hormuz matters for way more than oil and gas: Roughly one-third of global fertilizer shipments pass through the Strait of Hormuz, linking Gulf production hubs with agricultural markets worldwide. With shipping through the passageway disrupted, fertilizer markets are already repricing the risk — raising the prospect of higher crop input costs and, eventually, food prices.

For import-dependent Gulf economies like ours, the question is not whether fertilizer markets move — but how quickly those shocks filter into the region’s food supply chain.

The fertilizer market is where the math starts for the food supply chain

Nitrogen fertilizers are the driver of modern agriculture. Methane is converted into ammonia and then upgraded into urea and other nitrogen products used to boost crop yields. Around half of global food production depends on synthetic nitrogen fertilizers, with 180 mn tons consumed globally each year.

The Gulf dominates the market, and nearly all of its output must move through Hormuz. Around 55-60 mn tons of urea are shipped by sea annually, with the Middle East accounting for some 40-50% of that volume. Iran exports roughly 5 mn tons, while Saudi Arabia contributes around 4-5 mn tons through producers like Sabic.

Energy shocks have amplified the pressure since natgas is the main input for nitrogen fertilizers. “Natural gas’ key role as a fertilizer input could hit agricultural producers, impacting food prices,” MENA Director at Horizon Engage Andrew G. Farrand tells EnterpriseAM. Qatar’s shutdown of the Ras Laffan LNG export facility sent reverberations through the industry. Qatar accounts for roughly 11% of global urea exports, according to Bloomberg Intelligence analyst Alexis Maxwell. The country exports some 5.5-6 mn tons of urea and ammonia annually from its Qafco complex.

Market reax: Prices for granular urea jumped USD 60 per ton after the effective closure of the strait. In the US Gulf, spot for urea jumped USD 60-80 from last week, with traders warning that increases could follow if disruptions persist.

Supply chains were already tight before the conflict escalated: Urea markets turned bullish earlier after drone damage hit a Russian nitrogen plant, tightening availability. The US, despite producing domestically, still relies on imports from the Middle East that transit Hormuz.

Fertilizers may not even be the first agricultural bottleneck to bite: For some high-tech growers, specialty inputs such as pollinators and biological pest-control supplies can become harder to replace before fertilizer shortages become tight. That means prolonged disruption can start weighing on yields through the wider agricultural input chain — not just through urea prices alone.

Adding fuel to the fire, the EU announced that it will keep carbon levies on imported fertilizers under its Carbon Border Adjustment Mechanism, rejecting calls to suspend the scheme despite concerns it could push up costs for farmers. “The decision is ill-timed, especially given the repercussions of the ongoing war, the rising energy prices, and the halt in urea production from Qatar, the UAE, and Saudi Arabia — the largest gas exporters. Therefore, prices will rise much higher than the ETS carbon price increase," Osama Henein, H2lligence founder and CEO, tells EnterpriseAM.

The impact

The hit to food supply in our region may not be immediate: Gulf growers carry several weeks — five to eight — of core inputs on hand, including fertilizers, helping cushion short disruptions, CEO of Pure Harvest Sky Kurtz tells EnterpriseAM.

But that does not mean it’s not building: “We would start to feel pain after a period of time if there were complete blockages and we couldn't get goods through the borders,” Kurtz tells us.

2025 earnings keep rolling in

Savola Group

Savola Group’s net income dropped 91.2% y-o-y to SAR 874.5 mn in 2025, it said in a disclosure to Tadawul. The decline was mainly due to the absence of a one-time gain from the 2024 sale of Savola’s 34.52% stake in Almarai, alongside lower earnings from associates and higher operating costs from expanding stores.

Revenue rose 13.2% y-o-y to SAR 26.1 bn, supported by retail growth from store openings, stronger food processing sales — including the consolidation of United Sugar Company of Egypt — and a 5.9% jump in its frozen foods segment, which helped offset weaker performance in food services.

Dividends: The company’s board recommended the distribution of SAR 510 mn in dividends for 2025 at SAR 1.7 per share, it said in a separate disclosure. The distribution date has yet to be announced.

Saudi Chemical Company

Saudi Chemical Company posted a 15.1% y-o-y climb in net income to SAR 335.3 mn in 2025, thanks to higher sales volumes and lower expected credit losses on trade receivables, it said in a disclosure to Tadawul. Revenue rose 7.9% y-o-y to SAR 6.8 bn.

Dar Alarkan

Dar Alarkan Real Estate Development’s net income grew 40.5% y-o-y to SAR 1.1 bn in 2025, it said in a disclosure to Tadawul. Its top line rose 3.8% y-o-y to SAR 3.9 bn. The results were spurred by higher property and lease sales coupled with lower operating costs and higher returns from associates and Murabaha deposits, which mitigated the impact of increased financing expenses.

Walaa Cooperative Ins.

Walaa Cooperative Ins. swung to a net loss of SAR 175.8 mn in 2025 from a net income of SAR 64.3 mn a year earlier, it said in a Tadawul disclosure. The decline was driven by wider ins. service losses combined with weaker investment income and higher operating expenses. Revenues also edged down 7.2% y-o-y to SAR 3.1 bn over the year, mainly due to lower contributions from medical, motor, energy, engineering, and P&S non-linked segments, partially offset by growth in property and other general ins.

Astra Industrial Group

Astra Industrial Group’s net income rose 13.1% y-o-y to SAR 666.8 mn in 2025, supported by higher gross income from pharma and steel sales, lower financing costs in specialty chemicals, and income from an unconsolidated subsidiary, it said in a Tadawul disclosure. Meanwhile, revenue inched up 0.3% y-o-y to SAR 3.1 bn.

SMC Healthcare

Specialized Medical Company (SMC Healthcare) posted a 43.7% y-o-y rise in its net income in 2025 to SAR 266.2 mn, which management attributed to the structural benefits and operation leverage of scaling outpatient operations, it said in a disclosure to Tadawul. The firm’s top line surged 7% y-o-y to SAR 1.5 bn, due to a strategic pivot from long-term care toward high-performing acute inpatient and outpatient services.

Dividends: The company’s board recommended a dividend payout of SAR 0.32 per share for its 2025 earnings, amounting to SAR 80 mn.

Nayifat Finance

Nayifat Finance recorded a net loss of SAR 126.3 mn last year, down from a net income of SAR 131.2 mn in 2024, the company said in a disclosure to Tadawul. This came on the back of higher-than-expected credit loss provisions stemming from a write-off of personal and SME Islamic financing receivables and a new ECL estimation methodology. The firm’s revenues dropped 6.6% y-o-y to SAR 341.2 mn.

A short-lived Hormuz squeeze could be a boon for some GCC economies and a curse for others

The war between the US/Israel and Iran has fundamentally shifted the economic calculus for the GCC. While the headlines scream “oil shock,” the reality on the ground is a decoupling of price benefits from volume risks for some GCC countries, resulting in different scenarios across regional economies, according to a Goldman Sachs report seen by EnterpriseAM.

How is that possible? For countries capable of rerouting their oil exports, oil prices — which have surged beyond USD 100 / bbl — are going to offset the downside from lower export volumes, Goldman Sachs explains. Even blockaded countries are seeing better-than-expected budget balances because the price of the oil they can get out is so high. However, Goldman Sachs cautions that this scenario does not factor in expenditure forecasts, as they “may increase due to an adoption of anti-cyclical policy and/or increased spending on defense.”

The diverters: Saudi Arabia, the UAE, and Oman are the most insulated. Saudi Arabia is successfully diverting 3 mn bbl / d — about two-thirds of its Strait of Hormuz exports — via Red Sea pipelines, meaning a mere 1% drop in exports. The UAE is rerouting approximately 1 mn bbl / d, resulting in a negligible 2% drop in oil exports, while Oman’s loading facilities sit safely outside the Strait, Goldman Sachs notes.

Yes, but: This is based on an assumption of just a one-week-long disruption in shipping through the Strait of Hormuz, before a gradual return to full capacity.

IN CONTEXT- The Strait of Hormuz typically accounts for around 25% of global seaborne oil trade and some 20% of global LNG trade, according to a recent research note from Deutsche Bank seen by EnterpriseAM. However, oil flows through the chokepoint have now collapsed to just 10-15% of their normal volume, according to Goldman Sachs.

The blockaded: Kuwait, Bahrain, and Qatar have zero capacity to divert shipments. The report shows that Kuwait and Bahrain are now expected to see their economies contract this year, with oil exports falling by 5%.

Global exposure: Despite the EU and China being the world’s biggest energy importers, the impact of oil price volatility is potentially limited due to their declining dependence on fossil fuels, according to Deutsche Bank. Crucially, the EU’s energy import markets are diversified, resulting in a diminished reliance on Middle Eastern energy supplies.

The outlook: Future forecasts depend entirely on how long the Strait of Hormuz remains closed. Under the base case scenario of a “short-lived” disruption where volumes recover over 28 days, global growth would shrink by 0.1 percentage points, according to another Goldman Sachs report seen by EnterpriseAM. However, if the closure persists and oil stays above USD 100 / bbl, global growth would be dragged down by 0.4 percentage points, the report warns.

MARKETS THIS MORNING-

Asia-Pacific markets are down sharply in early trading this morning, with South Korea’s Kospi down 7.8% and Japan’s Nikkei down 7.0%, after oil jumped above USD 100 / bbl for the first time in years. Over on Wall Street, it is shaping up to be a turbulent start to the week with futures in the red.

TASI	11,007	+2.1% (YTD: +4.9%)
MSCI Tadawul 30	1,489	+1.9% (YTD: 7.3%)
NomuC	22,610	+0.5% (YTD: -2.9%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	46,774	-1.6% (YTD: +11.8%)
ADX	9,903	-1.4% (YTD: -0.9%)
DFM	5,917	-3.2% (YTD: -2.2%)
S&P 500	6,740	-1.3% (YTD: -1.5%)
FTSE 100	10,285	-1.2% (YTD: +3.6%)
Euro Stoxx 50	5,710	-1.1% (YTD: -1.2%)
Brent crude	USD 116.80	+26.0%
Natural gas (Nymex)	USD 3.19	+6.1%
Gold	USD 5,159	+1.6%
BTC	USD 66,520	-1.1% (YTD: -24.1%)
Sukuk/bond market index	919.52	0.0% (YTD: 0.0%)
S&P MENA Bond & Sukuk	151.78	-0.3% (YTD: -0.1%)
VIX (Volatility Index)	29.49	+24.2% (YTD: +97.3%)

THE CLOSING BELL: TADAWUL-

The TASI rose 2.1% yesterday on turnover of SAR 5.6 bn. The index is up 4.9% YTD.

In the green: Chemanol (+10.0%), Alujain (+10.0%), and Saudi Kayan (+10.0%).

In the red: Al Rajhi Reit (-2.2%), Mulkia Reit (-2.0%), and Azm (-1.9%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.5% yesterday on turnover of SAR 11.6 mn. The index is down 2.9% YTD.

In the green: Alqemam (+9.8%), KDL (+9.7%), and Horizon Food (+9.4%).

In the red: Alrazi (-9.7%), Multi Business (-9.1%), and Alashghal Almoysra (-9.1%).

CALENDAR

MARCH

12 March (Thursday): Deadline for real estate registration for 253.2k properties in 499 neighborhoods across Riyadh, Qassim, Makkah, and Hail.

18-23 March (Tuesday-Monday): Eid Al Fitr holiday (TBC).

21 March (Saturday): Fanatics Flag Football Classic, Kingdom Arena, Riyadh.

25-27 March (Wednesday-Friday): Future Investment Initiative Institute, Faena Hotel, Miami Beach.

31 March (Tuesday): Zatca’s 23rd E-invoicing integration wave deadline.

APRIL

6 April (Monday): Procurement and Supply Chain Futures Forum, Al Faisaliah Hotel, Riyadh.

6-7 April (Monday-Tuesday): Real Estate Supply Chain Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

12-15 April (Sunday-Wednesday): Saudi Print & Pack, Riyadh International Convention & Exhibition Center.

12-15 April (Sunday-Wednesday): Riyadh International Industry Week, Riyadh International Convention & Exhibition Center.

12-15 April (Sunday-Wednesday): Saudi Plastics & Petrochem, Riyadh International Convention & Exhibition Center.

12-15 April (Sunday-Wednesday): Saudi Smart Logistics, Riyadh International Convention & Exhibition Center.

13-16 April (Monday-Thursday): Leap Tech Conference, Riyadh Exhibition & Convention Center - Malham.

20-22 April (Monday-Wednesday): The Future Hospitality Summit, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

20-22 April (Monday-Wednesday): Saudi Paper and Packaging Expo, Riyadh International Convention & Exhibition Center.

20-22 April (Monday-Wednesday): Sports Investment Forum (SIF), Riyadh

22-23 April (Wednesday-Thursday): The World Economic Forum’s Global Collaboration and Growth Meeting, Jeddah.

27-29 April (Monday-Wednesday): Aluminum Arabia, The Arena, Riyadh.

28 April (Tuesday): GC Summit Saudi Arabia, Riyadh.

MAY

3-9 May (Sunday-Sunday): The Global Sustainability Expo, The Arena Riyadh Venue.

5-6 May (Tuesday-Wednesday): SkyMove Air Cargo MENA, Riyadh.

19-21 May (Tuesday-Thursday): The Saudi Entertainment and Amusement Expo, Riyadh Front Exhibition and Conference Center.

24-28 May (Sunday-Thursday): Eid Al Adha holiday.

JUNE

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

SEPTEMBER

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

23 September (Wednesday): Saudi National Day.

OCTOBER

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

26-28 October (Monday-Wednesday): ACHEMA Middle East, Riyadh International Convention & Exhibition Center.

NOVEMBER

24-28 November (Tuesday-Saturday): 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;
November: The UN Trade and Development Global Supply Chain Forum to take place in Saudi Arabia;
November: The Esports Nations Cup, Riyadh;
The Intervision international music competition will take place in Saudi Arabia;
6 July-23 August (Monday-Sunday): Esports World Cup, Riyadh.

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.

Signposted to happen sometime in 2Q 2027:

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

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