TODAY: Safeen Drydocks lands record AED 1.3 bn vessel orders

Good morning, ladies and gents. Today’s lineup spans shipyards, storage tanks, and the skies. We’re leading with Safeen Drydocks’ biggest catch yet — a record AED 1.3 bn haul that gives AD Ports' shipbuilding arm its largest-ever awards and a hefty orderbook to match. Meanwhile, Kuwait is spending nearly USD 1 bn to make room for more crude and to strengthen its export infrastructure. We round things out with a less cheerful outlook for Middle Eastern aviation, where the region's airlines are expected to be the only major carriers globally to slip into the red next year.

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Losing altitude

Airlines in the region took the earning hit: Middle Eastern airlines are expected to swing to a collective USD 4.3 bn loss in 2026 — making the region the only major airline market expected to slip into the red this year, according to IATA.

The downturn reflects pressure across the entire operating chain — airspace closures, flight cancellations, longer routings, weaker connecting traffic, and sharply higher fuel costs. IATA expects regional passenger demand to decline 11.4%, while capacity is projected to contract 4.4%.

Gulf carriers depend heavily on east-west transfer flows through Dubai, Doha, and Abu Dhabi, which makes lost connectivity more expensive than a normal demand dip.

IN CONTEXT- Gulf carriers’ reliance on east-west transfer traffic through hubs such as Dubai, Doha, and Abu Dhabi means disruptions to connectivity can have an outsized impact on earnings. While that has created a near-term opening for rivals including IAG, Lufthansa, Air France-KLM, and Cathay Pacific on long-haul routes linking Asia and Africa, Bloomberg reports industry executives as saying that the shift in demand is likely to prove temporary as Emirates, Qatar Airways, and Etihad restore capacity and passengers return to their usual transit options.

Already, Emirati airlines are preparing for more growth. Etihad is placing a double-digit order for more widebody aircraft and expects to be flying about 8% more than it was a year ago by mid-June, while Emirates — which is heavily hedged on fuel — had three-quarters of its flights operating at pre-conflict capacity as of May.

Yet another Opec+ hike

Opec+ opted to increase production quotas by 188k bbl / d in July, even if many of those barrels can’t physically reach the market. Saudi Arabia and Russia accounted for nearly two-thirds of the increase, with each receiving a 62k bbl / d quota boost, with the Kingdom — the largest swing supplier — targeting 10.4 mn bbl / d next month.

IN CONTEXT- The move marks the fourth consecutive quota increase and the latest step in Opec+’s gradual unwinding of the group’s voluntary production cuts. After putting production hikes on ice till March, Opec agreed to increase production by 206k bbl / d in both April and May, before cooling to 188k bbl / d in June.

A rise on paper: “The group will continue to unwind the voluntary cuts, but only on paper, because there will be no real increase under the current situation in Hormuz,” Kpler’s head of Middle East Energy Analysis Amena Bakr said. Producers with limited optionality — such as Iraq and Kuwait — remain unable to bring additional barrels to the market even if higher output targets are approved.

An empty seat: The meeting is the second gathering since the UAE’s exit, raising questions over how production quotas will eventually be redistributed among the remaining members.

A post-crisis plan is in place: Once shipping through Hormuz resumes, Iraq and Kuwait are expected to ramp up production to recover revenues lost during the disruption, unlike Saudi Arabia, which retains export routes that bypass the strait.

Market watch

Oil prices fell this morning after Iran and Israel signaled a halt in hostilities, Reuters reports. Brent crude futures fell USD 0.91 to trade at USD 93.34 / bbl by 04.00 GMT, while US West Texas Intermediate (WTI) dipped USD 1.13 to USD 90.17 / bbl.

The Baltic Index continues to fall: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — was down 2.2% to 2,916 points on Monday, driven by the bigger vessel segments. The capesize index declined 3.6% to 4,719 points, while the panamax index fell 18 points to 2,218 points. The smaller supramax index rose 8 points to 1,569 points.

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