TODAY: Folk Maritime puts expansion on hold over war costs + Gulf crude is back, the rest of the trade isn't

Good morning, wonderful people. The war is still working its way through regional trade, and this morning's issue shows how unevenly the costs are landing.

Folk Maritime has put its expansion plans on hold as war-driven costs climb. It's one of the clearest signs yet that the pressure has reached operators' long-term plans as well as their day-to-day running costs. We break down the decision and what it means for the company below.

Gulf crude, meanwhile, is back to prewar levels. The rest of the region's trade has yet to recover, and we look at what's holding it back.

Our favorite detail this morning: Saudi Arabia and the UAE are parking their crude closer to their biggest buyers in Asia. If you can't control the chokepoint, you can at least shorten the trip.

And on the war front, the Houthis have hit Saudi airports and energy infrastructure: The group claims its strikes disturbed air traffic at King Khalid International Airport and set fires at Aramco's Rabigh refinery, and it has warned airlines to stop flying in Saudi airspace. The General Authority of Civil Aviation said Jazan's King Abdullah bin Abdulaziz International Airport and Najran International Airport were targeted on Monday, leaving three people with minor injuries.

The strikes come as Yemen's Saudi-backed government says it has retaken the coast along the Bab Al Mandab Strait and Dhubab Airport. It also launched what it calls a “strategic attack” on Sanaa. Government forces took Dhubab district in Taiz, which overlooks the strait, cutting the road between Dhubab and Al Makha, and have since captured Al Makha and the towns of Bab and Hadeid. The campaign,announced last weekend, aims to restore state institutions and retake Sanaa and other Houthi-held territory.

Saving for a rainy strait

Saudi Arabia and the UAE want to keep more of their crude on the Asian side of Hormuz. The two are expected to back a Japan-led push to build bigger oil reserves across Asia at the Asia Zero Emission Community ministerial meeting in the Philippines on Thursday, Nikkei reports. Riyadh and Abu Dhabi would supply more crude and could offer emergency priority access. Japan would fund the stockpiles through its USD 10 bn Power Asia program.

It’s a bigger version of agreements already in place: Both have asked Japan to expand their existing Japan-based crude inventories roughly tenfold from around 8 mn barrels each. Aramco also holds 5.3 mn barrels in South Korea, with Seoul holding emergency purchase rights.

Most of Asia needs the cover: Japan holds more than 200 days of oil reserves.Thailand had 61 days as of March, the Philippines 53, and Vietnam just 30.

Saudi Arabia is also cutting prices to gain back Asian buyers: Aramco set November Arab Light at a USD 5 per barrel reduction to Oman-Dubai, its deepest since 2020, Reuters reported. Gulf exports are already back around pre-war levels, Reuters reported separately.

Japan isn’t going anywhere either: It sourced around 94% of its crude from the Middle East in 2025. Taiyo Oil CEO Takahiro Yamamoto wants it to stay above 90% once conditions normalize, even after Taiyo cut its own Gulf exposure to nearly 15% during the war, Bloomberg reported.

Ship of state

Iraq wants to deliver its own oil beyond Hormuz instead of handing it to buyers at Basrah, and its tanker company is looking to buy the ships to do it again, INA reported. The Iraqi Oil Tankers Company sent a VLCC it secured with specialist firms through the strait with 2 mn barrels aboard, its first such voyage in decades. The company says the shift lets state marketer Somo capture “better sales and pricing.”

So far, Iraq's buyers have carried the Hormuz crossing. Iraq sells FOB, with buyers responsible for collecting barrels inside the strait, and the costs are steep. Reliance paid USD 23-25 mn to lift 2 mn barrels of Basrah crude on a Sinokor VLCC, against about USD 2 mn before the war. Somo was also offering Basrah crude for ship-to-ship pickup near Oman, moving the handoff outside the Gulf.

The company's fleet is small and old. It runs six tankers of “limited capacity and older models,” the Oil Ministry said in August, when it set out a plan to acquire vessels carrying up to 2 mn barrels each through partnerships, deferred-payment purchases, or leases.

Aramco and Adnoc already run their own shuttles. Both take crude through the strait and hand it to buyers’ tankers outside it, with Aramco using dedicated tankers. Adnoc, which charters around 15 crude carriers, is buying five more from Frontline, and Aramco's Bahri runs around 50 VLCCs.

UAE-Jordan’s new rail link on track

The UAE-Jordan railway project kicked off yesterday with Abu Dhabi Crown Prince Khaled bin Mohamed bin Zayed Al Nahyan arriving in Aqaba, Jordan, to mark the launch of the Aqaba-Shidiya-Ma’an railway project, according to state news agency Wam. He was received by Jordan’s King Abdullah II, alongside other senior officials.

BACKGROUND- Jordan and the UAE inked an agreement on the USD 2.3 bn railway project back in 2024, with plans to connect Jordan’s Al Shidiya and Ghor es Safi mining regions with its sole maritime gateway in Aqaba. As part of this, the two agreed to set up the UAE-Jordan Railway Company to develop and operate the 360-km railway project. Financial close is expected in early 2027, and construction is estimated to take five years.

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Market watch

Oil prices climbed this morning as storm risks and Houthi attacks on Saudi Arabia offset rising Middle East supply, Reuters reports. Brent crude futures gained USD 1.05 to USD 101.63 / bbl by 04.30 GMT, while West Texas Intermediate (WTI) increased USD 0.80 to USD 90.24 / bbl.

The Baltic Index eased once again: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — was down 2.2% to 3,002 points on Tuesday.The capesize index declined 4% to 4,638 points. The indices measuring panamax and supramax remain mostly unchanged,

Data point

55.3 — that’s the UAE PMI reading (pdf) for September, remaining unchanged from August, as sustained improvement in business conditions allowed firms to raise output prices at the fastest pace in 15 years to offset rising input costs, including freight and raw materials. Exports also increased at the fastest pace since 2024, driving a rise in new orders — not as high as August levels, though.

September’s data is a sign that the non-oil sector “has moved past the mid-year slowdown linked to the Middle East conflict,” Principal Economist at S&P Global Market Intelligence David Owen said. Still, sentiment is subdued for the year ahead, a sign that firms “still view the economic outlook as uncertain,” Owen added.

Output rose at the fastest pace since February — before the war — on strong demand, and businesses staffed up in response, though staffing saw only a modest rise. Still, that’s an improvement from August, when employment fell for the second time in three months.

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