AGP Executive Report

Saudi Finances: Saudi Arabia reported a Q2 2026 budget deficit of 34.3bn riyals ($9.14bn), narrowing from the first quarter as revenues rose 12% while spending climbed 11%, with the first-half shortfall financed entirely through borrowing. Red Sea Security: Saudi Arabia hosted talks to launch a multinational maritime defence coalition to protect shipping and energy routes around Bab al-Mandeb, the Red Sea and Gulf of Aden; Pakistan and 13 other countries backed the plan, with headquarters to be hosted in Saudi Arabia. Energy Risk: Houthi attacks are reported to have knocked Saudi Aramco’s Jizan refinery complex offline for repairs until mid-August, while the wider US-Iran conflict is also raising fears for navigation after a drone strike near Egypt’s Damietta port. Retail Investment: Spinneys increased its stake in its Saudi unit to 70% by buying an additional 20% for 18m riyals, betting on Saudi’s premium grocery growth. Markets & FX: Asian stocks surged on hopes AI selloffs are easing, while gold held gains as Japan’s yen intervention weighed on the US dollar.

Auto Recall: Saudi Commerce ordered a recall of 6,574 BMW 5 and 7 Series (2023–2025) over a driver-seat wiring harness defect that could cause electrical shorts and raise fire/smoke risk; owners can check VINs on Recalls.sa and get repairs free via Mohammed Yousuf Naghi. Saudi Growth Watch: GASTAT said Saudi GDP shrank 4.8% year-on-year in Q2 2026 as oil activity fell 24.7%, pushing the economy into technical recession; non-oil grew 0.6% and government activity rose 0.9%. Red Sea Energy Risk: A drone strike at Egypt’s Damietta port sparked fires on US-owned gas vessels near the Suez Canal, renewing fears for Saudi oil exports and navigation as US-Iran tensions widen. Regional Security & Trade: Saudi Arabia is seeking an international coalition to protect Red Sea shipping from Houthi threats, after the group announced a maritime embargo and discussed potential fees for transiting ships. Telecom Earnings: stc reported H1 2026 revenue up 3.8% to SAR40.11bn and profit up 5.3%, with a second-quarter dividend of 0.55 riyals per share. Umrah Travel Reform: Saudi launched a one-year multiple-entry Umrah visa, easing repeat visits for eligible pilgrims, including Indians in the region and diaspora. Corporate/AI Deal: Tredence was named an OpenAI Select Partner, aiming to help enterprises deploy OpenAI models at scale. Sanctions: OFAC sanctioned two Iranian firms over an alleged IRGC-linked “extortion” insurance scheme for ships transiting the Strait of Hormuz and added vessels to its list.

Middle East Risk Premium: Iran fired missiles at US forces as the US and Saudi Arabia struck Tehran-backed militias in Iraq, killing at least 20 fighters and six Iranian advisers, while drone attacks also hit Egypt’s Damietta port—raising fears of wider escalation and adding fresh upward pressure on oil and inflation. Red Sea Shipping Squeeze: With Houthis expanding attacks on Saudi-linked tankers, Riyadh is seeking an international coalition to protect Red Sea shipping; Reuters also reports talk of Houthi “fees” for Bab el-Mandeb transits, a potential new cost layer for global trade. Oil Market Shock: Brent pushed back toward $100+ amid Hormuz and Red Sea disruptions, with analysts warning longer routes and higher freight could feed into consumer prices. Fed Watch: The US Federal Reserve held rates steady in a split decision, but markets reacted to long-end yield moves as investors grappled with inflation risks tied to the war and oil. Saudi-Pak Economic Ties: Saudi Arabia appointed Dr Rajeh bin Tami Al-Baqami as ambassador to Pakistan, as defence and investment cooperation deepen; separately, Saudi deferred Pakistan’s $5bn loan repayment for three years, easing near-term external pressure. Business & Tech: iTANZ set up a wholly owned entity in Saudi Arabia to expand in the Middle East; GSMA said Saudi ranks among leading large economies for 5G performance, with average 5G download speeds of 314 Mbps in 2025. Energy & Industry: Bahri posted record profit for Q2 2026, while Saudi Aramco reportedly suspended operations at Jazan refinery after an attack. Sports Business: FIFA plans to sell a stake in World Cup business operations via a semi-private subsidiary, targeting $4.2bn—sparking controversy over governance and investor links.

Middle East Risk Premium: Oil prices surged and Saudi stocks slid as US and Saudi forces carried out joint strikes in Iraq after Iran resumed missile attacks, with Brent jumping and regional markets reacting to fears of wider conflict. Saudi Corporate Impact: SABIC reported a narrower Q2 loss but revenue fell 18%, blaming war-related supply-chain disruptions and lower volumes. Market Watch: The Saudi bourse led Gulf declines amid the same escalation, while investors also tracked the Fed ahead of its rate decision. Shipping & Trade Pressure: Yemen’s Houthis are considering charging transit fees for ships through Bab al-Mandeb, a move that could further disrupt Red Sea shipping and Saudi crude routes. Logistics Push: DP World opened its first Saudi multi-client warehouse in Riyadh to speed inventory and distribution for retail, industrial and automotive firms. Aviation Connectivity: Saudia expanded codeshare cooperation with SkyTeam partners to add more seamless access to North America via major European hubs. Tourism Outlook: WTM Spotlight Riyadh will spotlight Saudi tourism resilience and growth, with forecasts pointing to continued momentum into 2027.

Red Sea Security: UKMTO reported a tanker heard an explosion in the southern Red Sea near Jizan; crew and vessel were safe, with no environmental damage, as the Houthis renewed claims of ballistic missile attacks on Saudi-linked shipping and forced some vessels to turn back. Oil & Shipping Impact: Multiple reports point to disruptions along Saudi oil routes as Houthi attacks intensify, adding risk to crude flows and tanker traffic through Bab el-Mandeb. US-Saudi Strike Back: CENTCOM said it intercepted an Iranian ballistic missile barrage aimed at US forces, then carried out joint strikes with Saudi aircraft in eastern Iraq against Iran-aligned logistics and weapons sites tied to drone attacks on US troops and Saudi energy infrastructure. Drone Threats to Saudi Energy: Saudi Defence said it intercepted drones targeting oil facilities in the Eastern Province for a second day, while Iraq and regional actors trade blame over launch sites. Digital Infrastructure: MIS signed an MoU with BSF Capital to study three Saudi data centre projects totaling 48MW, supporting cloud and AI workloads under Vision 2030. Aviation Expansion: Saudia expanded its SkyTeam codeshare with Air France-KLM, Delta and Virgin Atlantic, adding access to nearly 30 US and Canada destinations via European hubs. Markets Watch: Oil prices slid after a US-Iran pause eased immediate supply fears, while investors tracked earnings and sector rotation.

Red Sea Security & Oil Flows: Somalia condemned drone attacks targeting Saudi Arabia, saying the Kingdom’s security is vital for Red Sea navigation. Hormuz Fees Plan: Gulf states backed Oman’s proposal for voluntary fees to manage Strait of Hormuz, aiming to ease disruption to oil trade amid US-Iran tensions. Market Mood: Gulf bourses mostly fell as investors waited on Iran talks and the Fed; Saudi’s index slid 0.9% with pressure on Al Rajhi Bank and Saudi Aramco, while Zain Saudi rose on strong Q2 profit. Shipping Disruption Watch: Bab el-Mandeb traffic picked up to 28 vessels on Monday, but Red Sea risk remains a key swing factor for crude and freight. Aviation & Logistics: Saudia Cargo and Riyadh Cargo (Riyadh Air’s freight arm) signed an interline agreement to expand connectivity and reach 100+ destinations by 2030. Saudi Business & Policy: Saudi Arabia approved a new General Education Law, making digital and distance learning part of the framework and keeping compulsory schooling from ages 6-15. Saudi Finance & Growth Capital: Jada Fund of Funds backed Growth Catalyst Fund I, targeting $200m to fund growth-stage Saudi SMEs ahead of IPOs or acquisitions. Geopolitics & Nuclear Deal: Fresh debate continues around the US-Saudi civilian nuclear cooperation agreement and its conditions, with enrichment and safeguards still at the centre of scrutiny.

Cybersecurity: Hackers have been compromising hotel Wi‑Fi gateways to steal corporate credentials and hijack Microsoft 365 accounts, with victims reported across professional and financial services, legal, retail, health care and energy. Trade & Finance: Pakistan’s government approved a Rs98bn export subsidy package with cheaper 10-year loans at a fixed 5%, while Saudi-linked regional trade faces fresh pressure as visa freezes hit exporters and business travel. Saudi Investment Push: Bauchi State governor urged Saudi investors to back agriculture, solid minerals, oil & gas, tourism and aviation, including plans for an export processing zone and a Saudi air-connectivity push for Hajj/Umrah. Red Sea Disruption: The Bab el‑Mandeb corridor is back in focus after Houthi threats of a maritime blockade targeting Saudi-linked shipping, with Saudi saying it intercepted drones launched from Iraq and warned of retaliation; oil logistics are also shifting as tanker flows slow and reroute. Markets & Oil: Oil slid below $90 after a US-Iran pause, easing some inflation fears but keeping rate-hike worries alive; US stocks closed mixed as tech dragged. Nuclear Deal Politics: The US-Saudi civil nuclear “123” deal is drawing backlash over enrichment and safeguards, with Trump adding conditions tied to Israel normalization. Capital Markets: Brookfield raised about $2bn for a Middle East private equity fund anchored by Saudi PIF, targeting 50% of investments in Saudi. Healthcare & Business: Saudi and Uzbekistan discussed expanding healthcare cooperation, including progress on an 800-bed Fergana hospital project with Saudi participation. Infrastructure & Industry: Saudi-Turkish JV Mofarreh and Gülsan Holding is set to bid for Riyadh transport projects, while Mammoet expanded heavy-lift equipment in Saudi to support more concurrent industrial turnarounds.

Red Sea Shipping Crunch: Bab el-Mandeb traffic fell sharply after Yemen’s Houthis attacked Saudi-linked oil infrastructure, with Sunday crossings hitting the lowest level in months and crude shipping disruption lifting physical cargo prices across Middle East, Europe and Africa. Drone and Missile Escalation: Saudi Arabia said it shot down drones aimed at petroleum targets launched from Iraq by Iran-backed militias, while Houthis claimed attacks on Aramco facilities in Jizan and Yanbu and warned of further pressure on Saudi shipping. Oil and Markets: Brent slid toward the high-$80s as US-Iran strikes paused, but investors remain on edge over Red Sea and Hormuz risks; Gulf equities rose on de-escalation hopes while Saudi shares ended flat. Saudi Business & Growth: Riyadh’s Royal Commission for Riyadh City said the Northeast Riyadh master plan is complete, covering 456 sq km; GASTAT data showed Saudi operating revenues up 11.4% YoY in May, led by mining and manufacturing. Deals and Expansion: PIF and US Ex-Im signed a $15bn MoU to finance US goods and services; Saudia Cargo launched a Riyadh–Melbourne freighter route to boost Middle East–Australia trade. Healthcare Innovation: KFSH performed Saudi Arabia’s first Laser Interstitial Thermal Therapy (LITT) procedure for drug-resistant epilepsy and certain brain tumors. Startup Funding: Ash Games raised a $1.5m seed round to accelerate global expansion of Saudi culture-inspired games. Logistics Cooperation: Qatar and Saudi Arabia held talks to boost trade and logistics, including customs and service efficiency.

Red Sea Shipping Shock: Bab el-Mandeb traffic plunged after Yemen’s Houthis attacked Saudi oil installations, with only 11 commodity vessels passing on Sunday—the lowest in months—while Strait of Hormuz transit stayed severely restricted, pushing crude flows to reroute and raising freight and risk premiums. Oil Prices Ease on Pause: Global oil slid sharply as the US and Iran avoided fresh strikes for a second day, easing inflation worries; Brent fell about 5% in early trade to around $92/bbl, though Red Sea disruptions kept markets jittery. Saudi Infrastructure Under Pressure: Saudi-linked Red Sea ports losses were claimed to exceed $12bn as blockade measures, inspections and long container delays hit Hodeidah operations, with imports collapsing from millions of tons to about one million annually. Nuclear Deal Debate Heats Up: The US-Saudi civilian nuclear cooperation agreement faces renewed political pushback in Washington over enrichment and conditions tied to Israel normalization, while critics warn it could undermine non-proliferation strategy. Trade & Logistics Push: Qatar and Saudi Arabia moved to boost trade and logistics cooperation, focusing on customs coordination and smoother movement of goods. Market Mood in the Gulf: Gulf bourses mostly closed lower as the Red Sea conflict extended, with Saudi and Aramco shares among notable decliners.

Red Sea Security: A projectile reportedly landed near a southern Red Sea commercial tanker; UKMTO said the vessel and crew were safe, as shipping risks rise around Bab al-Mandab amid Saudi-Houthi tensions. Houthi Claims: Houthis also claimed they shot down a Saudi-operated reconnaissance drone over Al-Jawf, while they continue targeting Saudi-linked assets. Oil & Markets: Fresh Red Sea attacks have pushed Brent back above $100, lifting energy risk premiums and rattling broader markets. US-Iran Pause: Reuters reports the US paused Iran strikes for the first time in two weeks, citing escalation and munitions concerns, even as the wider conflict broadens. Education Reform: Saudi Arabia approved a new General Education Law under Vision 2030, setting a unified K-12 governance framework, keeping public co-education restricted to private institutions, and strengthening oversight. Housing Push: Saudi Municipalities and Housing said 63,076 families moved into first homes in H1 2026, with Sakani subsidized contracts topping 1.046m since 2017. Trade Data: GASTAT said May 2026 merchandise exports rose 3.9% y/y, driven by a 19.5% jump in oil exports, while the trade surplus surged 328.8%. PIF Finance: PIF signed up to $9.5bn in MoUs with World Bank Group arms (IFC and MIGA) to back infrastructure, energy, transport, tourism and healthcare. Logistics Expansion: Saudia Cargo launched a Riyadh–Melbourne freighter service to boost Saudi export connectivity to Australia.

Saudi-Houthi Red Sea Clash: Houthis fired missiles and drones at Saudi Aramco facilities in Yanbu and Jizan after Saudi strikes on Hodeidah, with Saudi civil defence reporting alerts and Reuters citing possible damage; the Houthis also warn of tighter pressure on Bab el-Mandeb shipping. Energy Shock Watch: The renewed attacks are again rattling oil markets, with Brent pushing back above $100 as shipping risks rise and export routes face fresh uncertainty. US-Iran Brinkmanship: Despite a pause in US strikes on Iran, the wider Iran-US standoff continues, while Iran accuses Ukraine of attacking an Iranian vessel in the Caspian Sea. Nuclear Deal Fallout: The US-Saudi 30-year “123” civilian nuclear pact is approved, but critics flag concerns over potential Saudi enrichment pathways and inspection limits, while Trump links the deal to Abraham Accords conditions. Digital Economy: Saudi Arabia’s internet speeds hit 216 Mbps on average, placing it among the top G20 performers, alongside rising mobile data use. Business & Sports: Al Hilal’s pursuit of Luis Díaz (€25m) underlines Gulf spending power, while Al-Nassr’s debt squeeze reportedly threatens summer signings.

Red Sea Energy Flashpoint: Yemen’s Iran-backed Houthis claimed they fired missiles and drones at Saudi oil facilities tied to Aramco in Yanbu and Jazan, saying it was retaliation for Saudi strikes on Hodeida; Saudi civil defence issued and then lifted danger warnings, while Reuters reported a Greek-operated Patriot system intercepted two ballistic missiles aimed at Yanbu. Escalation Claims & Counterclaims: The Saudi-led coalition said it struck Houthi military sites in Hodeida linked to threats against Red Sea shipping, with Houthis vowing further response and accusing Riyadh of widening the conflict. Nuclear Deal Politics: The US-Saudi civilian nuclear cooperation agreement is under congressional review, but Trump says it hinges on Saudi joining the Abraham Accords—sparking fresh debate over enrichment and regional security implications. PIF Financing Push: Saudi PIF signed up to $24.5bn in financing frameworks with US EXIM and World Bank arms (IFC, MIGA) to support portfolio companies and long-term projects. Tourism & Air Connectivity: Beond plans to expand all-premium European routes to Saudi’s Red Sea resort airport, building on its Milan service. Gold & Markets: Gold prices rose weekly as US-Iran tensions and Red Sea disruption lifted safe-haven demand.

Yemen-Red Sea Escalation: Iran-backed Houthis vowed retaliation after Saudi-led coalition strikes hit Houthi military sites in Hodeidah, as the group escalated from attacks on Saudi shipping to a “maritime blockade” and warned of “escalation for escalation.” Shipping & Oil Impact: Saudi confirmed a Red Sea attack on the NCC MASA tanker caused minor hull damage, while analysts flagged rising risks for Bab el-Mandeb and Hormuz routes, with oil volatility returning as traders price slower recovery of normal shipping. US-Saudi Nuclear Deal: The US and Saudi signed a landmark civilian nuclear cooperation agreement, but Trump said the pact hinges on Saudi joining the Abraham Accords, triggering fresh proliferation and political scrutiny in Washington and beyond. Saudi Finance & Deals: PIF signed an MoU with the US Exim Bank worth up to $15bn to back Saudi purchases of US goods and services, while Saudi-led coalition actions and Red Sea disruptions continue to shape near-term trade and logistics costs. Regional Markets: Middle East dividends totaled $29.2bn in Q1, with Saudi companies the region’s biggest payout source, even as geopolitical risk and trade uncertainty weighed on broader sentiment.

US-Saudi Nuclear Deal Twist: The US and Saudi Arabia signed a civilian nuclear cooperation pact, but Trump immediately added a new condition: Riyadh must normalise ties with Israel via the Abraham Accords, while also saying there will be no uranium enrichment under the deal—throwing implementation into doubt. Red Sea Energy Shock: Yemen’s Houthis claimed attacks on two Saudi oil tankers in the Red Sea as the US carried out further strikes on Iran; Brent jumped back above $100, reviving fears of another oil chokepoint disruption. Inflation & Markets Spillover: Oil-price volatility is feeding into inflation worries and currency pressure across the region, with investors watching central bank moves and tariff headlines. Saudi Digital Government Lead: Saudi Arabia topped the MENA digital government services ranking in the UN ESCWA GEMS index for a fourth straight year, scoring 99% overall. Telecom Upgrade: Zain KSA launched Saudi Arabia’s first commercial 5G-Advanced (5G+) rollout in Riyadh and Jeddah. EU Clears PIF EA Buyout: The European Commission approved Saudi PIF’s $55bn acquisition of Electronic Arts under merger rules.

Red Sea Shock to Energy Markets: Brent surged back above $100 after Yemen’s Houthis attacked two Saudi oil tankers, widening the US-Iran conflict and raising fears of a second shipping chokepoint at Bab el-Mandeb. Shipping Costs Jump: War-risk insurance premiums in the southern Red Sea doubled for some operators, with some Saudi-linked routes seeing rates near 3% of ship value. Saudi Nuclear Deal Whiplash: The US-Saudi civilian nuclear agreement signed days ago is now clouded by Trump’s new demand that Saudi Arabia normalize ties with Israel via the Abraham Accords, triggering pushback that “tweets don’t overturn signed agreements.” Markets Under Pressure: Higher oil feeds inflation worries; the dollar strengthens as Treasury yields rise, while equities slide on tech earnings and crude-led risk-off sentiment. Trade Policy Pressure: The US moves to impose new tariffs tied to forced-labour enforcement, adding another inflation and cost headwind for global supply chains. Regional Diplomacy: GCC leaders condemned the Houthi attack on a Saudi vessel, while Pakistan’s PM Shehbaz Sharif reiterated support for Saudi Arabia and called the attacks a threat to maritime security.

US-Saudi Nuclear Deal Under New Israel Tie: President Donald Trump says the newly signed US-Saudi civilian nuclear pact is “totally subject” to Saudi Arabia joining the Abraham Accords and normalising ties with Israel, while reiterating “no enrichment” under the agreement—an added condition that is likely to intensify scrutiny in Washington and alarm nonproliferation watchers. Red Sea Oil Shock Risk: Yemen’s Iran-backed Houthis claim they attacked two Saudi oil tankers in the Red Sea, prompting fresh US threats of “major military punishment” for Iran if attacks continue; the escalation pushed Brent briefly above $100 a barrel and raised fears of wider disruption beyond the Strait of Hormuz. Saudi Digital Push in the Region: Syria’s tourism ministry signed an MoU with Saudi tech firms Tamkeen, Cipher and Hawaz to build a unified digital tourism platform and strengthen cybersecurity and data governance. Telecom Upgrade at Home: Zain KSA launched commercial 5G-Advanced (5G+) in Riyadh and Jeddah, aiming for faster speeds and better indoor coverage as Saudi demand for AI and cloud services grows.