US and Saudi firms eye a USD 5 bn refinery project outside Hormuz

A consortium of US and Saudi firms is advancing plans for a USD 5 bn refinery and export complex outside Hormuz, Reuters reports. The Mera Oil consortium is now picking a host site for a facility that could process 200k bbl / d and connect to deepwater port infrastructure, with large-scale storage and marine export facilities. Backers plan to produce ultra-low-sulfur diesel and jet fuel for the US, Gulf, Atlantic Basin, and other markets.

The project is clearly in early days, so look at it as a potential archetype, not as a done deal. The consortium has narrowed its search to three locations in the GCC and expects to select a host by the end of the year. The consortium doesn’t yet have a feedstock provider and its bankability will be a function of who’s providing that feedstock, locked-in offtake agreements, and where the backers are proposing to build.

The UAE is making similar redundancy moves: ADNOC is weighing its own multi-fuel pipeline to Fujairah, next on its agenda after the crude line due in 2027. Etihad Energy, meanwhile, is planning a USD 300-350 mn investment in a 15k bbl/d refinery in Fujairah.

Why this matters: For all the talk of raw crude bypass projects across the region, refined-product bypass projects would solve a sharper pain point in the energy markets. Over the last few months, refined products have been more price-sensitive than crude, as the current infrastructure in the region already allows for better redundancy for raw crude flows. We’ve seen crude prices normalize during periods of ceasefire even with Hormuz shipping still behind pre-war levels, while refined products margins sustained their rally.

Seizing the moment?

Saudi Arabia is trying to use the momentum from last week’s US nuclear agreement (itself not really a done deal) to secure a purchase of F-35 fighter jets. Defense Minister Khalid bin Salman was in Washington this week to lobby for the F-35s and wider security cooperation, Semafor reports, citing unnamed sources. US President Donald Trump had indicated in November his readiness to provide “a lot” of F-35s and later approved a defense sale package that included future deliveries of the fighter jets following a visit by Crown Prince Mohammed Bin Salman.

A dual message on Iran: Meeting with US Vice President JD Vance, bin Salman reportedly said Riyadh still favors de-escalation with Tehran despite this week’s joint US-Saudi strikes on Iran-aligned forces in Iraq, Axios reports, citing an unnamed source. The sit-down was intended to assure Washington that the military action was strictly an act of self-defense, the source said.

SPEAKING OF SAUDI- The Kingdom's economy shrank almost 5% in the second quarter compared to the same period a year ago, its biggest decline since the covid-19 pandemic as the oil sector shrank by a quarter. Saudi GDP grew 3% in the first quarter of the year, which included just a month of the war’s impact.

Rebuilding the network

The Central Bank of Syria (CBS) has signed an agreement to open an account at Turkey’s central bank, the latest move in Damascus’ push to rebuild correspondent banking networks worldwide after over 14 years of sanctions. The two sides also agreed to cooperate on payment-system upgrades, and to help Syrian commercial banks open their own correspondent accounts in Turkey.

IN CONTEXT- Syria’s central bank has this year opened or reactivated accounts at the Federal Reserve Bank of New York, the Bank of Canada, and the German Federal Bank.

GO DEEPER- We’ve tracked the rebuilding of Syria’s banking industry in recent issues, including a look at the industry once again being connected to the SWIFT system, asking whether foreign capital can revive the sector, and looking at whether fintech players might leapfrog banks for retail clients.