THIS MORNING: Adipec loses out on Exxon, Chevron execs as fears of regional escalation mount

Good morning, friends, and happy Friday. It’s been a punishing year for the UAE’s small businesses: freight costs have soared, shipments are taking twice as long, and customers are paying later than ever. So our big story this morning brings welcome news. SME lender Beehive tells us small businesses are borrowing again, with October on track to be its best lending month on record, and the stress that showed up on its loan book over the summer has largely eased.

The conflict’s long tail runs through the rest of the issue, though. Borouge is paying double to ship its products without passing through Hormuz, FAB is still setting aside more for bad loans, and Sharjah has become the latest emirate to close its beaches as an oil spill edges toward a desalination plant.

It’s now reaching the UAE’s conference circuit, too. ExxonMobil and Chevron have cancelled plans to send executives to Adipec in Abu Dhabi next week, citing security concerns, sources told Reuters. Organizer DMG says US participation remains strong, with more than 120 American exhibitors, second only to China, and a record turnout expected from more than 170 countries.

Sound familiar? Earlier this month, several top energy executives were dropped from the schedule of the WPC Energy Congress in Riyadh after deadly attacks on the Saudi capital claimed by the Houthis, though that event went ahead. The news comes as fears mount that the US could resume strikes on Iran after the midterms.

Adnoc eyes sale of VTTI stake

Adnoc may sell its entire 10% stake in global energy storage operator VTTI, with India’s Adani Group among the suitors, Bloomberg reports, citing people it says are familiar with the matter. A transaction could value Rotterdam-based VTTI at c. EUR 3 bn (USD 3.4 bn), which by our math would put Adnoc’s stake at around EUR 300 mn. Co-owners IFM Investors and Vitol, which hold 45% each, may also sell down their stakes. Other bidders are in the mix, and the talks may not end in a sale.

Why buyers want in: Energy traders value storage more when supply is disrupted. VTTI stores oil products, chemicals, biofuels, and LNG at terminals across Europe, the Middle East, Asia, Africa, and the Americas, including the UK’s Dragon LNG and Italy’s Adriatic LNG. Adriatic LNG’s main customer, Edison, has been taking replacement cargoes there since QatarEnergy declared force majeure on its supply contract. VTTI also runs a terminal in Fujairah.

Selling would unwind a 2019 investment for Adnoc. It bought into VTTI that year to secure storage in key export markets across Asia, Africa, and Europe, along with more capacity in Fujairah, its main storage hub. At the time, Adnoc said storage closer to customers would give it more control over where, when, and how its products reached them.

Oracle plans more for UAE, KSA

US multinational tech giant Oracle is doubling down on its UAE and KSA footprint, executive VP for EMEA Cormac Watters told The National. Expansion in Qatar and Kuwait is also in the cards, he said, in another sign that Western players are staying the course on the AI buildout despite geopolitical instability.

Why now? Oracle cited “huge” demand for its data centers and has plans to set up several over the next six months, Watters said. The firm already has a presence in the UAE, including as a partner in the Stargate UAE project, and its Saudi footprint involves infrastructure linked to Vision 2030.

Watters didn’t disclose the specific locations, saying Oracle doesn’t “want any bad actors to somehow figure it out.” That comes after two AWS facilities in the UAE were struck during the regional war, with data held solely in one location still not recovered. Another sensitive point is sovereignty, with Watters saying clients wanted to know where data would ultimately be stored and who has access to “the big kill switch.”

Spilling over

Sharjah is the latest emirate to close down all its beaches after the recent oil spill off the coast of Umm Al Quwain — and the spill is now raising bigger concerns. Fears are mounting that the spill could affect nearby desalination plants, having come as close as 2km to one facility on the border between Umm Al Quwain and Ras Al Khaimah. Maritime intelligence firm Windward said the leak threatened the plant’s intake, according to Reuters; however, this hasn’t been confirmed by authorities.

REMEMBER- The spill — which is suspected to have been the result of a projectile attack on a crude vessel, though UAE officials have yet to confirm the cause — shut down beaches across Ras Al Khaimah and Umm Al Quwain over the weekend. Beyond the environmental concerns, the spill comes at the start of the winter tourism season, which could be a big blow for Ras Al Khaimah, an emirate that has built its tourism pitch on beaches and luxury resorts.

Data point

USD 8.7 bn — that’s how much the UAE expects its new economic partnership agreement with Canada to add to its GDP by 2033, Foreign Trade Minister Thani Al Zeyoudi told state news agency Wam. The pact marks the UAE’s first Comprehensive Economic Partnership Agreement (CEPA) signed with a G7 country. Al Zeyoudi expects the agreement to lift UAE exports to Canada by about USD 11.8 bn over the same period, nearly triple last year’s total non-oil trade between the two countries of c. USD 4.2 bn. Usual exports include iron, aluminium, metals, gold, certain electronic products, and pharma and food products.

PSA

WEATHER- Dubai is set for a high of 36°C, while it’ll hit 35°C in Abu Dhabi. Both emirates will see an overnight low of 26°C.

The big story abroad

Investors are losing patience over Big Tech’s AI spending. Alphabet shares fell 13% yesterday, wiping a record USD 500 bn off its market value, the second-biggest one-day loss in Wall Street history, the Financial Times reports. Amazon and Intel slid in after-hours trading, sending Nasdaq-100 futures down 1.7% and pushing investors into US Treasuries.

• Alphabet burned through USD 9.1 bn in free cash flow in 3Q as AI spending rose to USD 51.3 bn, while revenue from search slowed to 12% growth as AI answers ate into ad sales.
• Amazon fell 6% after missing estimates, even as its cloud unit AWS grew 39%, its fastest since 2021. Intel dropped 22% on a weak outlook, blaming a PC slump caused by memory chip shortages.
• Microsoft stood out with positive free cash flow, but it’s still raising USD 25 bn in bonds to help fund USD 170 bn in capital spending this year (CNBC).

ALSO- Binance has suspended all deposits and withdrawals after a suspected hack that could be the biggest crypto theft ever, possibly trumping Bybit’s USD 1.5 bn hack in February 2025, Bloomberg reports. The exchange says about USD 3 bn in assets has been frozen so far and that it will cover all losses. Tether and Circle have frozen some USD 2.3 bn in stablecoins linked to the incident. BTC fell to its lowest since September.

MEANWHILE- European Central Bank President Christine Lagarde will step down on 7 February, about nine months before her term ends, Bloomberg reports. EU governments are expected to choose a successor before the end of the year, most likely the Bank for International Settlements’ Pablo Hernandez de Cos or former Dutch central bank chief Klaas Knot.

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