Good morning. Reverbations of the Israel-Iran conflict is still dominating local and internation news headlines, with analysts trying to chart possible scenarios in an increasingly uncertain conflict.

An increasingly hawkish Trump reiterated his calls overnight for an unconditional surrender — needless to say in all caps — and threatening to kill Iranian Supreme Leader Ayatollah Ali Khamenei and describing him as an “easy target.”

But the real and growing concern is if Trump decides to turn words into actions and formally join Israel’s war on Iran, potentially using its more advanced hardware to target deep underground facilities that the Israelis are unable to do. Pointing to the increased likelihood of the US’ direct involvement, Trump said the country’s patience was “wearing thin,” described how “we” have established dominance of Iranian airspace, and directed the forward deployment of the US air power. (Reuters | New York Times | Financial Times | Bloomberg | Guardian)

While the world’s attention turns to Iran, Israel’s starvation of Gaza and daily massacres have continued, the most recent of which saw 59 Palestinians slaughtered yesterday as Israeli tanks fired into crowds of people waiting for desperately needed food aid. “The people are dying, they are being torn apart, to get food for their children,” one eyewitness told Reuters. The killing of those seeking aid in what the UN describes as the “the hungriest place on Earth” has become a depressingly familiar story coming out of the besieged strip in recent weeks, despite the entire population of Gaza being at risk of famine.

Elsewhere in the strip, at least another 14 people were killed, bringing the day’s death toll to at least 73. But with the conflict now in its 20th month and developing events elsewhere taking away diplomatic and media focus, the relative silence on Gaza in recent weeks has been deafening. (Reuters | New York Times | Financial Times | Guardian)

HAPPENING TODAY-

#1- Flynas will go public on Tadawul’s main market today, marking the Kingdom’s largest IPOso far this year and the highest-grossing Saudi IPO since Aramco’s stellar USD 29.4 bn debut in 2019, according to a Tadawul bulletin published yesterday.

This is the region’s first IPO of a major airline since 2008, and it’s the third-ever carrier tolist in the GCC after UAE’s Air Arabia and Kuwait’s Jazeera Airway — beating Abu Dhabi’s Etihad Airways to market.

Shares will be allowed to trade within a 30% range for the first three days, before being capped at no more than 10% up or down starting on the fourth day when circuit breakers kick in.

REFRESHER- Flynas priced its IPO at SAR 80 apiece — the top of the range it was guiding on — allowing it to rake SAR 4.1 bn in proceeds after its institutional offering saw an overwhelming demand. The larger tranche of the IPO — in which the PIF-backed airline is taking a 30% stake to Tadawul — was 100x oversubscribed, while the retail tranche was 3.5x covered.

Rising uncertainty is not affecting the IPO pipeline (yet): The Kingdom’s IPO pipeline remains resilient despite mounting geopolitical risks related to the Israel-Iran conflict, with several listings scheduled for the coming weeks, Bloomberg reports, citing statements from investment bankers in the region.

Large listings could face delays: While upcoming large, government-backed listings may be delayed, smaller, domestically focused IPOs remain on track, Al Rayan Investment’s acting CEO Akber Khan said. Brent’s rebound to near USD 75/bbl is also offering a buffer to GCC markets. Main market listings — including Specialized Medical, Sports Club, Dar Al Majed, Marketing Home Group, Ejada Systems — remain on track, with no delays announced.

Pundits weigh in: “The recent history for MENA equities is that markets realize quickly that a spasm of fighting does not impact the medium- to long-term economic and earnings trajectory,” Bloomberg cited JPMorgan Chase as saying in a note. However, analysts caution that a prolonged conflict could weigh on investor risk appetite.

#2- The US Federal Reserve’s Open Market Committee will make a decision on interest rates today, with Gulf countries set to follow suit. The Fed is widely expected to maintain its current policy, keeping benchmark federal fund rates at 4.25%-4.50% during this week’s meeting as persistent tariff-related inflation and global uncertainties overshadow easing pressures, according to a Reuters poll of economists. Economists estimate the first cut won’t arrive until September, with another potential cut set to follow by the year-end.

WEATHER- Riyadh is expected to see a high of 45°C and a low of 30°C today, while Jeddah’s mercury will go as high as 37°C and as low as 27°C. Makkah will see a 44°C high and 33°C low.

PSAs-

Riyadh residents will now be notified via text messages when road or utility work is about to start near their homes or businesses, the Riyadh Infrastructure Projects Center said on X. The alerts will include the location, duration, and type of work — road repairs or updates to water, electricity, or internet services — to help residents plan ahead and find alternative routes.

WATCH THIS SPACE-

#1- Saudi Arabia receives final stamp to officially host Expo 2030: The Bureau International des Expositions (BIE) approved Expo 2030 Riyadh’s registration dossier, handing over the World Expo flag to the Kingdom to host the event from October 2030 to March 2031, according to a statement released yesterday. Riyadh’s submission — completed in half the standard time — was the fastest in BIE’s history, according to the statement.

What’s next? Saudi Arabia can now begin the implementation phase, including sending out official invitations for international participants, BIE said in a separate statement.

ICYMI- The Kingdom was named host in November after edging out Italy and South Korea in balloting by BIE member states.

DATA POINT- The event could attract mns of visitors to the Kingdom, with spending on infrastructure and other components of the event estimated to be in the USD 92 bn range.

#2- Saudi National Bank’s (SNB) ongoing USD 1.25 bn (tier 2 debt issuance has booked USD 4 bn in orders from both local and foreign institutions, Bloomberg reports, citing a source it says is familiar with the matter. The two-day offering, which kicked off yesterday, was reportedly priced at 200 bps above US Treasuries.

The details: The 10-year notes, which will be listed on the London Stock Exchange, are callable after five years, with minimum subscriptions starting at USD 200k, SNB said in a disclosure to Tadawul.

SNB is issuing the tier 2 notes via a special purpose vehicle, with proceeds earmarked for boosting tier 2 capital, corporate funding, and broader strategic objectives.

ADVISORS: Abu Dhabi Commercial Bank, DBS Bank, Emirates NBD, Goldman Sachs, HSBC, JP Morgan Securities, Mashreq Bank, Mizuho International, SNB Capital, SMBC Nikko Capital Markets, and Standard Chartered are joint lead managers and joint bookrunners for the offering.

#3- The Kingdom is now expected to see its oil economy grow by 5.2% in 2025, up from an earlier estimate of just 1.9% growth, the Institute of Chartered Accountants in England and Wales (ICAEW) said in its Economic Update report — out before the escalation between Israel and Iran. Non-oil growth is also seen expanding at around 5% in the next few years, the note reads.

Budget deficit is expected to reach 3.4% of GDP this year, in what would be a wider deficit than the 2.8% registered in 2024.

Diversification progress to remain strong: “Both Saudi Arabia and the UAE are well placed to leverage the announced technology and AI agreements in line with the region's diversification objectives,” the note reads.

The GCC at large is seen growing by 4.4% this year, representing an upgrade of 0.4 percentage point from previous forecasts, according to the report. The growth will be primarily driven by “faster Opec+ output increases and sustained non-oil momentum in key economies like Saudi Arabia and the UAE," Zawya quotes ICAEW’s Scott Livermore as saying.

Oil-sector growth will come in at a higher rate than previously expected: The larger output hikes announced by Opec+ for May, June and July are expected to contribute to oil-sector growth of 4.6% in the GCC this year, up ICAEW’s previous forecast of 3.2% of oil-sector growth. Meanwhile, non-energy sectors are also expected to grow — but at a slower pace than previously predicted, with the ICAEW revising its forecast down by 0.3 percentage point to 4.1% this year.

#4- Event organizer Time Entertainment’s stock dropped 14.4% on its Nomu debut yesterday, closing the session at SAR 68.50, according to market data. Shares will be allowed to trade within a 30% range for the first three days, before being capped at no more than 10% up or down starting on the fourth day when circuit breakers kick in.

REMEMBER- The company floated a 20% stake at SAR 80 apiece in a secondary offering that was 1.4x oversubscribed.

#5- Gulf Schengen-style visa gets the greenlight? A unified tourist visa for all six GCC countries was given the green light and is expected to be implemented “soon”, UAE’s Economy Minister Abdulla Bin Touq Al Marri told AlKhaleej Times on the sidelines of the UAE Hospitality Summer Camp press conference on Monday.

Why it matters: The GCC Grand Tours Visa is a Schengen-style system that will allow tourists to visit all six member states — Saudi Arabia, the UAE, Bahrain, Qatar, Oman, and Kuwait — on a single visa. It is poised to be a game-changer for regional tourism, boosting bleisure travel — where business visitors extend their stays to explore neighboring countries.

BACKGROUND- The initiative, now in the home stretch, was approved back in 2023 and is slated to launch later this year, though no specific date has been confirmed.

#6- PIF-backed Riyadh Air’s recent Airbus order has boosted its order book to 182 aircraft, Marketing and Corporate Communications VP Osama Al Nwayser told Al Arabiya Business on the sidelines of the 2025 Paris Airshow. Riyadh Air — which locked in an order for up to 50 Airbus aircraft — is set to announce its first route and ticket sale mechanism within months, Al Nwayser added, without specifying an official date.

Ready, set, and almost fly: Our newest airline is scheduled to receive its first aircraft in 3Q2025 — snapping planes through two major agreements for Boeing 787 Dreamliners and Airbus A321neos. It also received its Air Operator Certificate (AOC) earlier in April and solidified the interior design of its fleet. The airline plans to integrate AI in its operations, with support from Microsoft and IBM, to improve data analysis and passenger services.

#7- Undisclosed Saudi and Bahraini investors are set to launch a joint venture for building and construction materials by the end of 2026, chairman of the Saudi-Bahraini Business Council Majid Al Baqmi told Aleqtisadiah on Monday. The new company will support infrastructure, industrial, and entertainment projects in Bahrain by providing construction materials like cement, iron, timber, and quarry outputs, along with Saudi companies that are allowed to export to Bahrain.

The joint venture will open offices in both countries, and it will potentially work toward listing in Tadawul. Equity in the company will be open to all categories of investors, including individuals, sovereign funds, and government entities, Al Baqmi said. The exact capital and contribution percentages between the two countries are still under review pending a final economic study.

MARKET WATCH-

Global oil supplies are expected to outpace demand this year even as Middle East tensions heighten concerns over potential disruptions, the International Energy Agency (IEA) said in its annual report (pdf).

By the numbers: Oil production is forecast to grow by 1.8 mn bbl/d this year to reach 104.9 mn bbl/d, while demand is projected at 103.8 mn bbl/d — resulting in rising oil inventories throughout the year. The surplus is driven by Opec+ producers gradually reversing earlier output cuts and non-Opec+ producers contributing an additional 1.4 mn bbl/d on average.

Global inventories have been rising steadily, with storage levels increasing by an average of 1 mn bbl/d since February. In May alone, oil jumped to a “massive” 93 mn bbl/d — that said, total inventories remain 90 mn bbl below year-ago levels.

Long term outlook: Global oil supply will continue exceeding demand through 2030, with production capacity rising by 5 mn bbl/d to 114.7 mn bbl/d, according to the IEA. Demand is expected to grow more slowly, increasing by 2.5 mn bbl/d to a projected peak of 105.5 mn bbl/d by the end of the decade. A major factor in this slowdown is China, where consumption is now expected to peak in 2027, driven by the widespread adoption of electric vehicles, high-speed rail expansion, and gas-powered trucking.

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