THIS MORNING: UAE (+ Qatar, Kuwait, and Israel) buy USD 8.6 bn of US defense systems + Adnoc lines up AED 200 bn for local contract awards

Good morning, everyone. With still no concrete updates on negotiations between the US and Iran, our Big Story Today takes a look at Abu Dhabi, whose AA sovereign rating was affirmed by Fitch, courtesy of the emirate’s fiscal and external buffers. Despite a solid sovereign rating, fiscal space is expected to tighten as the emirate ramps up both borrowing and spending to prop up its economy in the wake of the war.

Plus: The US greenlit a USD 8.6 bn defense sale agreement to countries in the region, including the UAE, bypassing congressional approval and citing national security interests as justification for their “immediate” sale.

AND- More earnings are out from DFM, Investcorp, and PureHealth, and Adnoc is lining up AED 200 bn in project awards for local manufacturing.

From the Dept. of Good News

Airspace restrictions in place since the start of the war have now been scrapped, state news agency Wam reports.

Fare reset? UAE fares may soften as airspace reopens and capacity returns. Long-haul routes to the US, Canada, and Europe are likely to lag, with redeployed aircraft slow to unwind and pricing not expected to normalize until August.

WEATHER- Temperatures are cooling slightly from the 40°C peak over the weekend, with a high of 38°C in Dubai and Abu Dhabi and lows between 27-28°C.

Watch this space

The UAE is among buyers of a wider USD 8.6 bn military sales agreement from the US to countries in the region, according to a statement from the State Department. Israel and Kuwait are also getting military systems, while Qatar inked two agreements, according to statements from the US State Department.

The UAE’s package is worth USD 147.6 mn, and will see it buy 1.5k advanced precision kill weapon systems, as well as rocket launchers, explosive warheads, and US technical support and services. Qatar is getting the largest sale, with two separate agreements worth around USD 5 bn in total (here and here). Israel is buying USD 992.4 mn worth of advanced precision kill weapon systems, and Kuwait is looking to secure USD 2.5 bn in integrated battle command systems.

In a rush? Sales like these typically need congressional approval. However, the statements read that there was justification for the “immediate sale” due to “national security interests.”

ICYMI- The move comes after the regional war triggered a defense rethink for GCC countries, as USD 20k-100k Iranian drones were costing between USD 3-12 mn to shoot down. Analysts told us the UAE’s current strategy was “unsustainable at scale.” While this US sale points to a quick fix, the UAE is also increasingly looking to localize defense production and own the tech behind counter-drone systems, rather than just buying it.

MANUFACTURING — UAE industrial push shifts into overdrive: Abu Dhabi National Oil Company (Adnoc) is lining up AED 200 bn in project awards between now and 2028, in a move set to deepen local manufacturing and strengthen supply chain resilience, state news agency Wam reports. The awards span upstream and downstream projects.

Adnoc said it is also doubling down on its In-Country Value (ICV) program, pushing “Made in the Emirates” products to the front of procurement and linking contractors with a growing pool of local manufacturers. The National ICV Program redirects procurement spend into the domestic economy, with ICV-certified firms — those prioritizing local sourcing — gaining an edge in tenders and contracts.

The push comes as part of a broader localization drive amid regional disruption. The government recently launched an AED 1 bn national fund to localize more than 5k essential products, while expanding ICV across federal entities, signaling a coordinated effort to scale local industry and reduce import reliance.

PLUS- It was only recently that Adnoc also said it was committing tens of bns of USD to develop its natural gas business in the US via its overseas investment arm, XRG, in a move that would bring more optionality into its portfolio, as the regional energy market continues to face disruption.

TRANSPORT — AED 2.9 bn road build: The first phase of developing a new road between Abu Dhabi’s Saadiyat Island and Khalifa City will come with an AED 2.9 bn price tag, Gulf News reports. The new route will pass through Umm Yifeenah Island, with part of the route already open.

REGULATION — ADGM tightens AML rules further: The ADGM Registration Authority published updates to its anti-money laundering (AML) measures, it said in a statement. The move comes just a few days after it published a consultation paper aiming to align its regime with updates to the UAE’s AML laws and international standards.

The main change: Firms won’t be able to issue bearer shares, which are typically harder to trace and can be issued to anonymous holders who hold only a physical certificate rather than registering their holdings.

ALSO- The changes include clarified roles and obligations for trustees, tighter controls on what trusts and foundations can do if they are classified as nonprofit within the framework, and updated timelines for certain deadlines and filings.

ENERGY — UAE exits another oil alliance: The UAE has officially withdrawn from the Organization of Arab Petroleum Exporting Countries (Oapec), according to a statement. The move follows the Emirates’ surprise exit from Opec and Opec+ late last month.

Oapec? The Kuwait-headquartered alliance was founded in 1968 to foster cooperation between Arab oil-producing nations, focusing on technical research, joint ventures, and regional energy policy. The organization does not play a role in setting global oil prices and production quotas. The UAE was not a founding member.

COMPANIES — IFFCO faces emergency liquidation: Lenders led by HSBC Holdings Plc are reportedly seeking court intervention to seize control of food and agri-business company IFFCO Group from its current owners, the Financial Times reports. The company — burdened with USD 2 bn of debt — now faces provisional liquidation, whereby an appointed liquidator — FTI Consulting — can temporarily take control of the company and preserve its financial position.

IFFCO has been embroiled in monthslong restructuring talks and disputes between its main shareholders. The crisis in the Strait of Hormuz exacerbated the company’s troubles by crippling critical food import channels.

Happening today

Make it in the Emirates kicks off today and runs through Thursday, 7 May at the Adnec Center Abu Dhabi, putting the UAE’s industrial push front and center as policymakers and corporates look to turn pipeline ideas into concrete agreements.

The big story abroad

US forces will begin guiding vessels stranded in the Gulf through the Strait of Hormuz today, President Donald Trump said. With many of these ships running low on provisions, Trump characterized the effort, which he is calling “Project Freedom,” as a “humanitarian gesture,” but offered few concrete details on what this would entail.

Where do US-Iran peace talks stand? Tehran is currently reviewing Washington’s response to its latest peace proposal, a 14-point framework reportedly designed to end hostilities and lift the naval blockade on the Islamic Republic.

Making waves in the business press is US retailer Gamestop, whose CEO Ryan Cohen aims to make an unsolicited bid to acquire eBay for some USD 56 bn. Cohen revealed that GameStop has acquired around 5% of the e-commerce player and is proposing a buyout at USD 125 per share. The proposal, consisting of stock and liquid funds, represents a 20% premium over eBay’s Friday closing price.

Also, are blockbuster comedies back? The Devil Wears Prada 2 raked in USD 233 mn at the box office over its opening weekend, the highest figure for a traditional comedy in 11 years.

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Market watch

The UAE’s Opec exit could eventually translate into cheaper, more flexible crude for importers like India, as Abu Dhabi breaks away from Opec quotas — opening the door to more competitive supply agreements once disruptions clear, according to experts speaking to Fortune India.

The country is planning to ramp up its capacity to 5 mn bbl / d by next year, up from around 4.8 mn bbl / d currently.

ALSO- Opec+ decided to raise output in June in their first meeting since the UAE’s exit, with the remaining seven Opec+ producers agreeing to increase production by 188k bbl / d, partially unwinding the voluntary cuts announced in April 2023, according to a statement. The 188k bbl / d increase marks a step down from May’s 206k bbl / d hike, and could reflect the alliance’s new math after the UAE formally exited Opec and Opec+ on 1 May.

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