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Saudi’s peace premium might have an expiration date

1

WHAT WE’RE TRACKING TODAY

Aramco moving ahead with USD 10 bn asset sale

Good morning, ladies and gents. The prospect of regional escalation is all everyone is talking about, as an end-of-the-week deadline will prove whether Trump was serious about the breakthrough in negotiations, or whether we’re heading for a new phase in an already unprecedented conflict. We have more on this in today’s big story, below.

Watch this space

ENERGY — Aramco is reportedly moving forward with the sale of a stake in its oil export and storage terminals, Bloomberg reports, citing people it says are familiar with the matter. The state giant reportedly tapped Citigroup to advise on its potential multi-bn-USD asset sale last November, which could fetch over USD 10 bn in proceeds.

The “business-as-usual” signal: Gulf states are pressing ahead with energy agreements to signal resilience despite the escalating regional conflict. Kuwait’s KPC is similarly moving to lease parts of its pipeline network, drawing interest from global private equity and infrastructure investors.

Oil flows shift after refinery hits: Refineries in both Saudi Arabia — particularly Ras Tanura — and Kuwait were struck in the past weeks, forcing Riyadh to divert crude through its East‑West pipeline to Yanbu on the Red Sea. Both governments have reaffirmed that production remains a priority.

Ras Tanura — Aramco’s export architecture anchor: Aramco’s key export and storage infrastructure includes its main hub at Ras Tanura on the Arabian Gulf, with additional terminals on the Red Sea.


DISRUPTION WATCH — Ades pauses offshore rigs across the GCC: Ades Holding has temporarily suspended operations at several offshore drilling rigs in the GCC amid regional tensions that have halted transit through the Strait of Hormuz, forcing Gulf producers to slash daily crude production due to limited storage capacity.

Diversification cushions disruption: Ades characterizes the suspensions as short-term and essential for the safety of personnel and assets. The firm’s steady geographic footprint — 123 rigs across 20 countries — will act as a hedge, allowing them to absorb local shocks without derailing the long-term growth trajectory.

ICYMI- Gulf energy infrastructure is bracing for even more heat, after Trump’s threat to target Iranian power plants if it doesn’t fully open the Strait of Hormuz by Friday was met with an Iranian rebut that “all energy infrastructure, as well as information technology […] and water desalination facilities, belonging to the US and the regime in the region will be targeted.”


CAPITAL MARKETS — Networkers taps Estidamah for main market move: Saudi Networkers Services Company appointed Estidamah Capital as financial advisor for its migration from the Nomu parallel market to the Tadawul main market, it said in a disclosure to Tadawul.

What it takes: To transition from Nomu to the main market, a company must have been listed on Nomu for at least two years and satisfy all main market listing conditions — except for market capitalization, where a lower threshold of an average SAR 200 mn over the past six months applies.


SPORTS — AFC moves West Region knockouts to Jeddah amid war: The Asian Football Confederation (AFC) confirmed that all remaining West Region knockout matches for its 2025-26 club competitions will be played as single-leg ties at centralized venues in Jeddah. Postponed ties have also been relocated to the city after the original fixtures in Qatar, Iran, Saudi Arabia, and the UAE were stalled from early March due to the ongoing US-Israeli war with Iran, Reuters reports.

The new schedule: The Champions League Elite Round of 16 will take place on 13-14 April at King Abdullah Sports City and Prince Abdullah Al Faisal Sports City Stadium, featuring Al Ahli vs. Al Duhail and Al Hilal vs. Al Sadd. The quarter-finals, semis, and final are scheduled for 16-25 April.

More events rescheduled

The World Economic Forum postponed its Jeddah Collaboration and Growth Meeting, originally set for 22-23 April, due to the ongoing conflict, state news agency SPA reports. A new date is yet to be set.

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The big story abroad

In what would be a major escalation, the Pentagon is reportedly expected to dispatch thousands of soldiers to the region and potentially inside Iranian territory. The number of troops reportedly ranges from 2k to 3k soldiers from the US Army’s Airborne Division.

Meanwhile, Iran says Strait of Hormuz is open: Tehran said that “non-hostile vessels” may transit the Strait of Hormuz “in coordination with Iranian authorities,” in a letter to International Maritime Organization members. That said, some 3.2k vessels remain stuck in the Arabian Gulf, seemingly unwilling to brave the waterway yet.

Mediators from Egypt, Turkey, and Pakistan want to set up talks between the US and Iran by Thursday, though a diplomatic divide remains between Washington and Tehran, the Wall Street Journal reports.

And in the world of AI: ChatGPT maker OpenAI is shuttering its video generation offering Sora just six months after its debut in a bid to streamline its products. The company positioned the program as a means to create lifelike AI-generated videos within a community-focused environment. Available on the Apple App Store without charge, Sora has seen its popularity decline since its debut.

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THE BIG STORY TODAY

The expiration date on Saudi’s peace premium

Years of diplomatic groundwork may have insulated the Kingdom from the worst of the ongoing regional conflict, turning Riyadh and Jeddah into vital logistical lifelines and prompting corporates to rethink relying on one hub in the region. However, this strategic buffer might be highly fragile: with a Friday deadline looming for a US ultimatum against Tehran, further escalation threatens to trigger a global energy shock — and shatter the broader regional stability required to fund the Kingdom’s aggressive FDI targets.

The geopolitical hedge at work

The Kingdom has been working for years to cool down regional tensions. The Chinese-brokered détente with Tehran in March 2023, and the strict policy to freeze the situation in Southern Yemen (one that saw Saudi enter a brief standoff with the UAE shortly before the war), were seen as crucial for the diversification efforts to bear fruit. Riyadh publicly rejected any usage of its airspace in attacks on Iran — not only this time around but also during the June 2025 attacks.

The strategy seems to have paid off when we needed it the most. Iranian attacks on Riyadh and the Eastern Province were substantially lower than the barrages that hit Dubai, Bahrain, and Kuwait, and the heaviest strikes on our territory were reserved for the US embassy and military assets. Houthis — once a troubling presence — did not jump into the conflict (yet).

That poised Saudi as a “safer” haven, actively absorbing rerouted supply chains while neighboring maritime routes and regional markets faced unprecedented disruption. The East-West pipeline almost tripled its average daily oil exports in March following the Hormuz closure, and shipment rates are reportedly already dropping from their peaks as more tankers arrive at the Yanbu port. Riyadh airports were one of the main entry and exit points in the early days, when widespread airspace closures grounded most flights. The Port of Jeddah is now seen as a key lifeline to which essential food and meds shipments were rerouted.

We’re also being eyed as a hedge against regional instability. No one we talked to is seeing massive capital flight from Dubai or Doha, but businesses are weighing the benefit of having more than one regional HQ to ensure continuity. A similar effect is taking place in tech: hosting additional redundancies in Riyadh and Jeddah can prevent service outages like the prolonged ones that resulted from the targeting of data centers in Dubai and Bahrain.

BUT- The Kingdom is still part of the wider GCC, and relative calm in our territory is unlikely to stay attractive if investors see the whole region as unstable. Sectors like tourism are confidence-sensitive, and a longer conflict is going to ramp up the pressure with every passing day, according to ratings agency Moody’s.

Regional stability is crucial for Saudi’s diversification plans to work, especially if we’re banking on steady FDI inflows to fund projects through 2030. This was already a concern going into 2026, as the pace of FDI inflows’ growth turned out slower than expected.

DATA POINT- To hit the 2030 target of USD 100 bn annually (or 5.7% of GDP), the Kingdom needs a compound annual growth rate of over 21%, according to our calculations. That is unlikely to happen unless institutional investors are convinced Saudi (and the Gulf as a whole) is insulated from regional volatility.

Time is not our friend

The longer the conflict drags on, the more willing Washington, Tel Aviv, and Tehran are to take higher risks to tip the scales in their favor. Actors currently sitting out the conflict — not just the Houthis, but non-state actors in Iraq and even Lebanon — could also start playing a more active role, further destabilizing the region.

Strikes from both sides have been steadily shifting from military targets to civilian and energy infrastructure. We are only a couple of weeks in, and we already saw Israel strike the world’s largest gas field, which sparked Iranian retaliation that took out 20% of Qatar’s LNG supply — and it could take five years before production is back to normal levels. Our own Samref oil refinery was hit and got away with a temporary shutdown, resuming work in a few hours, but it’s not unlikely that a major escalation could see more extensive damage to our energy assets in a similar vein to Qatar’s Ras Laffan.

It could get much worse: Trump issued an ultimatum for Tehran to open Hormuz or their power grid will be destroyed, to which Iranian officials responded with threats to take out energy and civilian infrastructure across the region. The humanitarian and economic costs in that situation will be unbearable if diplomacy does not prevail before the deadline, now extended to Friday.

Could continuous Iranian strikes and the threat of escalation drag us into direct military confrontation with Tehran? We think this is highly unlikely given the quagmire it’s going to cause, but the US press seems eager to heavily signal we’re getting closer to this moment. Unconfirmed reports by the Wall Street Journal claim Saudi recently agreed to let US forces use the King Fahd air base, while the New York Times reported Crown Prince Mohammed bin Salman is pushing Washington to continue the war, citing “people briefed by American officials.”

The government denied the conversation, saying in a statement that Saudi “has always supported a peaceful resolution to this conflict, even before it began,” and the main concern remains defending its territory “from the daily attacks on our people and our civilian infrastructure.”

Oil disruption remains the real elephant in the room

Prolonged physical oil supply shortages run the risk of exhausting at-sea inventories, leaving the market in a steep price discovery mode that could send oil to very high levels. Saudi and the UAE’s alternative routes make only for a portion of some 20% in global oil barrels that used to pass through the strait, now effectively shut as tankers are either unwilling or unable to risk passage and US efforts to rally a global campaign to forcefully open the strait seem to have fallen through.

Higher oil prices might prop up revenues and shrink our deficit in the short term, but demand destruction will be bad for everyone. “A price spike to USD 180 / bbl functions as a massive global tax that could trigger a contraction in global GDP, effectively killing the consumer appetite,” Market Strategist at Pepperstone Ahmed Assiri tells EnterpriseAM. That level “remains a mathematically sound projection if diplomacy fails by Friday, dragging the disruption on for months to come,” Assiri added.

REMEMBER- Saudi officials are reportedly already mapping out a scenario where oil hits USD 180 if disruptions continue until April.

What’s at stake?

The Friday deadline is now the pivot point — not just for Saudi but for the global economy in 2026, according to Assiri, and institutional participants seem to be treating Trump’s “constructive talks” with skepticism. “The market is currently in a state of waiting for the headlines that will either reprice the risk premium to the downside or trigger the most aggressive energy shock in modern history,” he says.

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INFRASTRUCTURE

Desalination networks can become a frontline risk

The GCC’s desalination network — the backbone of its water supply — is emerging as a frontline risk. Iran explicitly threatened “irreversible destruction” of Gulf water infrastructure if the US follows through on President Donald Trump’s threat to attack Iran’s electricity grid.

Historical conflicts in the Gulf have avoided targeting desalination plants, but this conflict could shape up to be different. The US and Iran are already trading blame: Iran announced a 7 March strike on a Qeshm Island desalination plant cut water to 30 villages, accusing the US of setting the precedent. A day later, Bahraini authorities reported that an Iranian drone damaged one of its own facilities.

Even near-misses are costly: Kuwait’s Doha West power and water plant caught fire from interceptor missile shrapnel.

The fallout of a major strike goes far beyond dry taps. Power plants require desalinated water for cooling, which means electricity supplies would take an immediate hit. The cascading effects would force hospitals to ration care, shutter businesses and industries, and introduce water rationing.

An exposed lifeline

The region’s reliance on these facilities is nearly absolute. Gulf countries depend on desalination for 42-90% of their total water consumption. Kuwait gets 90% of its water from these plants, while Saudi Arabia relies on them for about 70%. Across the region, some 100 mn people depend on this infrastructure for drinking water.

The proximity problem: People in the Gulf rely on just a few desalination plants for most of their water, making them highly strategic targets. These facilities are situated right on the coast across the Arabian Gulf from Iran, making them an easy target for an Iranian attack.

Desalination plants are “inherently fragile” in a region with virtually no alternative freshwater sources, Mohamed Abdel Hamid Daoud, a water resources advisor to the Abu Dhabi government, says. Because they require massive amounts of electricity to run, they are usually integrated with power plants, increasing the risk of disruption if energy infrastructure is targeted.

Direct hits aren’t the only threat. A large oil spill in the Gulf could force these plants to halt operations for weeks or months due to the difficulty of treating contaminated water.

If worse comes to worst

A one-week clock: If capacity is taken out, the impact would be quick and severe, wiping out water to major cities in a matter of days. Estimates are that most Gulf countries only have water reserves to last about a week.

Disabling major plants simultaneously would trigger an “unprecedented logistical crisis,” forcing an impossible reliance on bottled water and tanker trucks, David Michel of the Center for Strategic and International Studies told the Associated Press.

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EARNINGS WATCH

Medgulf + Saudi Manpower Solutions release 2025 earnings

Medgulf

Mediterranean and Gulf Ins. and Reins. (Medgulf) saw its net income drop 59.7% y-o-y to SAR 41.1 mn in 2025, weighed by weaker investment income and higher ins. financing costs, along with a high-base effect from one-off gains in 2024, it said in a disclosure to Tadawul. Meanwhile, ins. revenues rose 21.6% y-o-y to SAR 4.3 bn, thanks to stronger performance in the firm’s health and motor segments.

Saudi Manpower Solutions

Saudi Manpower Solutions reported a 19.2% y-o-y rise in net income to SAR 150.6 mn in 2025, supported by stronger demand and improved margins, it said in a Tadawul disclosure. Revenue increased 10.7% y-o-y to SAR 2.1 bn over the year, led by the corporate segment (+9.8%) and the individuals segment (+16.9%), offsetting a modest 3.2% dip in logistics.

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ALSO ON OUR RADAR

Aramco taps Solutions for supercomputers, Gasco eyes 50% of Jacko Gases

Solutions by STC to upgrade Aramco’s exploration and reservoir analysis

Solutions by STC will deploy an SAR 1.4 bn upstream supercomputers project for Aramco, according to a Tadawul disclosure. Under a signed one-year agreement, Solutions will provide high-performance computing systems, software licensing, and managed services to enhance Aramco’s oil and gas exploration and reservoir analysis through improved subsurface imaging and data processing.

GCC oil players are focusing on the value chain: S&P Global expected GCC national oil companies to prioritize value chain integration and upstream activities this year despite cautious spending. While regional capex is projected to rise, its players will remain focused on exploration, production, and securing reliable feedstock flows from upstream to downstream operations.

Gasco eyes 50% of Jacko Gases

Gasco to acquire 50% of Jacko Gases for SAR 125 mn: National Gas and Industrialization Holding Company (Gasco) signed an equity interest purchase agreement to acquire a 50% stake in Jacko Gases from Mohammed Saleem Al Otaibi Company, it said in a bourse filing. The SAR 125 mn transaction is structured as a capital injection intended to double Jackco’s share capital — valuing the company at SAR 125 mn pre-acquisition — and fuel its expansion plans.

What’s next: The transaction, to be financed from internal resources, remains subject to regulatory approvals and will lead to Jacko’s financial consolidation upon completion.

Top line snapshot: Jacko Gases, which operates in the production, filling, and distribution of industrial and medical gases, posted a 30% y-o-y increase in revenues to SAR 66 mn in 2025, up from SAR 51.5 mn in 2024.

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PLANET FINANCE

War is casting a dark shadow over PMIs

The proof is in the PMI: Purchasing Managers’ Indexes across Europe and Asia for this month are the latest evidence of the global economic slowdown caused by the regional war, according to a spate of recent reports from across the world.

Private sector activity in the eurozone (pdf) dropped to a 10-month low in March, with the composite PMI falling to 50.5 from 51.9 in February, barely above the 50 threshold that separates growth from contraction. The reading fell short of economists polled by Reuters, who had penciled in 51.

A closer look: Manufacturing held up slightly better, but services are starting to stall. Some of the strength in manufacturing was chalked down to frontloading orders to beat future supply chain issues, which could lead to weaker data later on, S&P director and economist Phil Smith told Morningstar.

Results are similarly bleak elsewhere: Australia’s PMI saw a sudden contraction, while business confidence in Japan (pdf) dropped to its lowest level in nearly a year. India (pdf) registered its weakest growth since 2022 as war-driven inflation bites, and the UK’s (pdf) private sector activity came in at its lowest level in six months.

As expected, energy volatility is primarily behind the results. Companies are reporting the fastest rise in input costs in three years, as attacks on oil infrastructure and the Strait of Hormuz disruption propel the energy sector into panic. Rising oil prices are pushing up costs for businesses, disrupting supply chains, and feeding through into inflation, with supplier delays also increasing sharply due to shipping disruptions.

Yet again, it’s another symptom of stagflation as slow economic growth colludes with inflation. The phenomenon has already hit the bond market, wiping USD 2.5 tn off global bond values and making investors think twice about where to hedge their bets.

Where do we go from here? In short, everything depends on how long the war lasts. While indicators pointed to global growth gathering momentum pre-war, the conflict has turned predictions on their head, Director of Global Economics at Bloomberg Jamie Rush said. Even if a ceasefire is agreed tomorrow, the damage is already done, with a European Central Bank statement pointing to higher inflation risks and slower economic growth.

MARKETS THIS MORNING-

Asia-Pacific markets are a sea of green in early trading this morning, with Japan’s Nikkei and South Korea’s Kospi leading gains — both are up around 2.5% — as hopes that the US-Iran war will soon conclude drive the rally.

TASI

10,949

0.0% (YTD: +4.4%)

MSCI Tadawul 30

1,479

-0.1% (YTD: +6.6%)

NomuC

22,492

-1.1% (YTD: -3.5%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

4.25% repo

3.75% reverse repo

EGX30

46,931

-1.4% (YTD: +12.2%)

ADX

9,524

+1.1% (YTD: -4.7%)

DFM

5,471

+1.6% (YTD: -9.5%)

S&P 500

6,556

-0.4% (YTD: -4.2%)

FTSE 100

9,965

+0.7% (YTD: +0.3%)

Euro Stoxx 50

5,581

+0.1% (YTD: -3.6%)

Brent crude

USD 104.49

+4.6%

Natural gas (Nymex)

USD 2.90

-1.3%

Gold

USD 4,514

+1.8%

BTC

USD 70,359

-0.6% (YTD: -19.7%)

Sukuk/bond market index

912.53

-0.5% (YTD: -0.7%)

S&P MENA Bond & Sukuk

148.45

-0.5% (YTD: -2.3%)

VIX (Volatility Index)

26.95

+3.1% (YTD: +80.3%)

THE CLOSING BELL: TADAWUL-

The TASI remained unchanged yesterday on turnover of SAR 8.5 bn. The index is up 4.4% YTD.

In the green: Bawan (+10.0%), MESC (+7.3%), and APC (+7.1%).

In the red: Amak (-7.4%), Arabian Drilling (-6.9%), and Maaden (-6.8%).

THE CLOSING BELL: NOMU-

The NomuC fell 1.1% yesterday on turnover of SAR 20.7 mn. The index is down 3.5% YTD.

In the green: Tharwah (+10.3%), DRC (+9.7%), and Ngdc (+9.5%).

In the red: Mayar (-16.1%), Mobi Industry (-10.7%), and Apico (-9.6%).


MARCH

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

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

APRIL

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

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

MAY

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

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

15-17 June (Monday-Wednesday): Aluminum Arabia, The Arena, Riyadh.

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.

JULY

6 July-23 August (Monday-Sunday): Esports World Cup, Riyadh.

AUGUST

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

SEPTEMBER

9-10 September (Wednesday-Thursday): Procurement and Supply Chain Futures Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

9-10 September (Wednesday-Thursday): Real Estate Supply Chain Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

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:

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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