THIS MORNING: Oil exports inch back to 85% of pre-war levels + Dubai Holding eyes stake in data center developer Hscale

Good morning, friends. The numbers in this morning’s issue read a lot like a recovery story.

The UAE’s oil exports are at 85% of pre-war levels, according to the International Energy Agency. That’s 4.3 mn bbl / d in early June, up from 1.9 mn bbl / d in March — a more-than-doubling in roughly 10 weeks, before the US-Iran interim agreement even took hold. The infrastructure did what it was built to do — Adcop rerouted crude around Hormuz, the Mandous storage complex kept barrels moving, and Adnoc's own tanker fleet improvised the rest.

Meanwhile, US and UAE ties are stronger than ever: Secretary of State Marco Rubio was in Abu Dhabi yesterday for talks with President Mohamed bin Zayed Al Nahyan, National Security Adviser Sheikh Tahnoon, and Foreign Minister Abdullah bin Zayed, and he left with a clear message — the US won’t trade away Gulf security in exchange for an agreement with Tehran. The 14-point accord still leaves Iran's ballistic-missile program untouched and opens 60 days of harder talks on nuclear issues, so the assurance matters.

Also in recovery mode — Dubai’s housing sector. May’s data shows the pace of correction slowing, and some communities are bucking the trend entirely. Plus: AD Ports has tightened its grip on Global Feeder Shipping, lifting its stake to 81%. We have the numbers on both.

The downside of recovery

The oil supply rebound is hitting prices: Murban was trading at a USD 0.67-per-barrel discount, while Dubai crude slipped to a USD 0.27 discount after commanding a premium of more than USD 60 in March, Reuters reports. Oman’s discount widened to USD 0.96 a barrel.

Why the selloff? Asian refiners are already supplied through August and have “no need for the incremental barrels,” Sparta Commodities’ June Goh told Reuters. Cheaper Gulf crude has instead opened the arbitrage to Europe, with traders sending Murban and Upper Zakum cargoes west.

PLUS- Adnoc has set the selling price of its flagship Murban crude for July at USD 101.48 / bbl, down from USD 104.44 a month earlier, Reuters reports.

Gems plans USD 30 mn India expansion as demand falters slightly at home

Gems Education is making a fresh push into India. The Dubai-headquartered education operator plans to invest up to USD 30 mn in the country over the next three to five years, Economic Times reports. The expansion plans include opening more than 30 Gems-operated schools across India, alongside a network of over 1k partner schools that will carry the Gems brand, targeting a total of over 3 mn students. It’s also planning to launch a teacher-training system and a Category II alternative investment fund targeting school infrastructure and new campus developments in high-demand, low-supply markets.

The rollout is already taking shape. Gems India has lined up 21 school projects, with the first five campuses due to open this academic year, while another 16 campuses are planned over the following two years across eight states.

The move adds to expansion plans here at home, including plans to invest AED 2 bn over the next three years, despite what CEO Dino Varkey described as a slight dip in student registrations this year as fewer families move here from overseas amid geopolitical uncertainty, he told Reuters.

Just a small blip? “It's still very much a growth scenario. Just maybe the velocity has been dialed down a little bit,” Varkey said. “Once we have really clear resolution in relation to the conflict, I actually expect a lot of families to look back on their decisions and frankly choose to move over here,” he added.

From suites to servers

Dubai Holding is considering acquiring a stake in Bain Capital-backed data center developer Hscale as it looks to expand its European portfolio beyond luxury hospitality, Bloomberg reports, citing people it says are familiar with the matter. Hscale designs and builds data centers across Europe, the Middle East, and Africa. Dubai Holding is working with an undisclosed adviser as Bain seeks fresh capital to grow the business, though talks are ongoing and may not lead to an agreement.

IN CONTEXT- The potential investment comes as Dubai Holding’s IPO plans cool. Preparations to list its retail assets have reportedly been paused amid the war’s hit to tourism. It has continued deploying capital elsewhere, becoming Emaar’s largest shareholder last month after lifting its stake to 29.73%.

Adnoc, TotalEnergies, BP to develop Bab Gas Cap

An Adnoc-led concession has been selected to develop and operate the Bab Gas Cap project, Wam reports. The project — billed as the largest gas cap development project in the world — is expected to have a production capacity of 1.5 bn standard cubic feet of natural gas per day. The concession will be operated by Adnoc Onshore.

The concession breakdown: Adnoc will hold a 60% participating stake, with the remaining 40% split between global energy giant TotalEnergies (10%), UK-based BP (10%), China National Petroleum Corporation (8%), and other Japanese, Chinese, and Korean players.

We’re still waiting to hear the final investment decision, which we are expecting sometime this year.

SOUND SMART- Gas cap projects target oil reservoirs where natgas has naturally gathered above the oil layer. As oil is extracted, the trapped gas expands, acting as the primary mechanism for pushing the oil out of the reservoir.

The Paramount-Warner Bros saga continues

The latest in Paramount’s proposed Gulf-backed takeover of Warner Bros. Discovery: Paramount Skydance is reportedly divesting its film distribution JV with Universal Pictures to clear EU antitrust hurdles over its USD 110 bn takeover of Warner Bros Discovery, Reuters reports, citing unnamed sources. The offer will extend the European Commission’s preliminary review deadline to 21 July.

The latest regulatory victory faced by Paramount was an antitrust probe by the US Justice Department, with the institution ruling last week that the transaction wouldn’t harm competition or consumers.

REMEMBER- The transaction — partially funded by a USD 24 bn equity injection from Abu Dhabi’s L’imad Holding, Saudi Arabia's Public Investment Fund, and the Qatar Investment Authority — places CBS-owner Paramount in control of Warner Bros Discovery, the parent company of HBO and CNN.

Not out of the woods yet: Following a green light from Brussels, the merger still faces an EU Foreign Subsidies probe, targeting the Gulf funds — Paramount is expected to secure unconditional approval, Reuters reports. Several US states — including California and New York — are preparing to sue to block the merger, the newswire said.

Data point

10% — that’s how much more pricey it could become to build data centers and hotels in the UAE on the back of rising construction costs, according to a Currie & Brown study picked up by Zawya. Construction costs for data centers are projected to rise by up to 9.9%, while hotel development costs could climb by roughly 9.5%.

What’s driving it? Both project types rely heavily on material-intensive mechanical, electrical, and plumbing systems. Meanwhile, a massive pipeline of data centers, hotels, gigaprojects, and airport expansions is keeping supplies tight. Under a higher-oil-price scenario, steel prices in the UAE and Saudi Arabia could rise by up to 15.9% by September, with aluminium up 10.5% and copper gaining 5.4%.

ICYMI- The pressure was already building before this forecast: UAE material prices rose as much as 71% y-o-y earlier this year as the construction boom collided with shipping bottlenecks and higher freight costs. Several major contracts were also awarded early in 2Q despite a 39.9% y-o-y drop in construction awards in 1Q, keeping materials tight. The US-Iran agreement has eased immediate oil supply and Hormuz concerns, but uncertainty remains over where energy and material prices settle.

PSA

Long weekends all summer long? Dubai is bringing back its flexible summer working hours scheme for the second year, according to a Dubai Media Office statement. The initiative will run from next week through to 10 September.

The new hours: Employees will be divided into two groups — one will work seven-hour days from Monday to Thursday and 4.5 hours on Fridays, while the other will work eight-hour days Monday to Thursday, with Fridays off. Government bodies may implement flexible or remote schedules based on operational needs and staff duties.

WEATHER- The mercury reaches 41°C today in Dubai and Abu Dhabi, before cooling to overnight lows of 30-31°C, according to our favorite weather app.

The big story abroad

Oil dips as ships leave Hormuz: An uneasy wind-down in US-Iran tensions coincided with tankers continuing to exit the Strait of Hormuz, dragging Brent crude futures down around 4.3% to USD 73.74 yesterday — its lowest level since the start of the war.

Speaking of the war: US President Donald Trump asked Congress for USD 88 bn to cover the costs of the four-month conflict. Both the Senate and House separately moved to end the war this month, displaying bipartisan (if largely symbolic) resistance to the campaign.

Micron earnings ease fears of chip-wreck: Extraordinary earnings by Micron — the largest US manufacturer of memory chips — have restored confidence in tech companies following a sharp selloff this week. It posted a 15-fold income jump to USD 28.2 bn in its financial quarter ending in May, surpassing Wall Street expectations by about USD 4 bn.

Another chip player is making moves: SK Hynix — South Korea’s premier chipmaker and most valuable company — is looking to raise USD 29 bn by issuing depositary receipts on the Nasdaq, as it capitalizes on soaring demand for AI.

BTC’s bad year gets worse: Crypto's biggest asset BTC saw its price drop below USD 60k yesterday, reaching its lowest level in 20 months, as an expected Fed rate hike forces investors to flee risky positions for safer assets.

A dry, hot European summer: A heatwave has raised temperatures across Western Europe by as much as 18 °C, resulting in dozens of deaths, disrupted power supplies, and school cancellations. The phenomenon is triggered by a weather pattern known as an Omega block, where heat is trapped for extended periods, keeping cooler temperatures from entering.

Tremor looms over Caracas: A magnitude 7.2 earthquake hit 160 km west of the Venezuelan capital city Caracas, which could lead to as many as 100k casualties, according to the US Geological Survey. The earthquake followed a magnitude 7.5 tremor.

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