The Oil Paradox

Happy Sunday. A new trading week is here, and there's already plenty to watch.

For decades, rising oil prices have been a welcome development for Saudi Arabia. More expensive crude generally means more revenue for the world's largest oil exporter.

But this time, the equation is different.

Brent crude surged above $117 a barrel on Friday, reaching its highest level since April. Yet Saudi stocks have just completed their longest weekly losing streak in 32 years.

The contradiction is becoming difficult to ignore. Oil is getting more expensive partly because traders fear Saudi Arabia could struggle to deliver it.

Meanwhile, Aramco is awarding new offshore contracts, Saudi banks are reporting stronger profits, and another international conference has disappeared from Riyadh's calendar.

Brent crude climbed to nearly $117.50 a barrel on Friday as escalating attacks on Saudi Arabia and renewed threats to Middle Eastern shipping pushed oil prices to their highest levels in almost six months.

The Numbers: Brent settled at $116.72 a barrel, gaining 3.1% on Friday and 6% over the week. US West Texas Intermediate closed at $103.27.

The international benchmark briefly reached $117.45 during the session, putting the psychologically important $120 level within reach.

What's Driving It: Three developments are keeping traders on edge:

An oil spill off the United Arab Emirates coast has added another complication, although authorities have not established its cause.

Why It Matters: Higher oil prices do not automatically mean higher Saudi oil revenue. The Kingdom also needs to produce and export enough barrels to benefit.

For investors, that distinction matters. Oil above $115 could strengthen Aramco's earnings, but disrupted shipments, expensive insurance and threats to infrastructure could offset some of those gains.

What To Watch: Whether Brent breaks $120 when markets reopen on Monday, and whether Saudi export volumes continue recovering despite the attacks.

Saudi Arabia's oil investment programme is continuing despite the regional conflict.

Saudi Aramco has awarded three offshore projects worth AED 2.8 billion ($763 million) to Abu Dhabi-listed NMDC Energy.

The Deal: The contracts cover engineering, procurement and construction work on offshore energy projects.

NMDC Energy said in its Friday disclosure that the projects are expected to take between 18 and 23 months to complete. The company did not identify the offshore fields involved or disclose individual contract values.

The Bigger Picture: NMDC Energy already has a substantial relationship with Aramco and operates fabrication facilities in Saudi Arabia.

The latest awards follow AED 2.2 billion in new projects secured by the company during Q2. Its project backlog stood at AED 3.3 billion at the end of June, meaning the latest awards represent a substantial addition relative to that earlier figure.

Why It Matters: While attacks are disrupting Saudi energy operations, Aramco is still committing money to offshore infrastructure.

That matters for contractors, equipment suppliers and engineering companies whose revenues depend on the Kingdom's energy investment programme.

The awards also suggest Aramco is maintaining longer-term development commitments rather than putting all offshore construction activity on hold.

What To Watch: Whether more offshore contracts are awarded before year-end, and whether security conditions affect project execution schedules.

Saudi banks are still making more money, even as the stock market suffers one of its worst losing streaks in decades.

The Numbers: All ten listed Saudi banks reported higher profits for the first nine months of 2026, with combined earnings rising 6.8% yoy to SR73.6 billion ($19.6 billion).

Combined operating income increased around 7%, according to Argaam's banking sector analysis.

Al Rajhi Bank led the sector with SR20.87 billion in nine-month profit, up 13.3% yoy, ahead of Saudi National Bank at SR19.48 billion, up 4.6%.

The Contrast: Among four petrochemical companies that have reported, combined nine-month earnings fell nearly 45% yoy to SR1.15 billion. The comparison remains preliminary because most petrochemical companies have yet to publish their results.

What's Driving Bank Profits: Stronger operating income has supported earnings, with demand for financing from businesses and property developers providing opportunities for banks to expand lending.

Saudi Arabia's infrastructure investment, housing developments and private-sector expansion have helped underpin borrowing demand.

But banks face a balancing act. Growing loan portfolios can generate more income, while competition for deposits, funding costs and provisions for potential loan losses can erode profitability.

Why It Matters: Saudi banks are demonstrating that profitable growth remains possible despite the economic disruption.

For investors, the question is which banks can keep expanding earnings without taking on excessive lending risks or paying too much to attract deposits.

Al Rajhi's faster profit growth makes it stand out, but its shares also trade at a substantial premium to Saudi National Bank. That leaves investors weighing stronger profitability against a cheaper valuation.

Reopening Saudi airports is proving easier than persuading international airlines to return.

Indian carrier InterGlobe Aviation, which operates IndiGo, announced Friday that it would extend cancellations across four Saudi cities.

The New Dates: IndiGo flights to and from Riyadh will remain cancelled through October 31, while services to Jeddah, Dammam and Madinah are suspended through October 27.

The airline cited the evolving security situation and said it was coordinating with authorities. The Indian Embassy in Riyadh confirmed the revised dates, according to Press Trust of India.

The Wider Problem: Several international airlines have maintained restrictions even after Saudi authorities began restoring airport operations.

Reuters reported earlier this week that airlines must obtain clearance from Saudi aviation authorities before operating flights, adding another complication to restoring normal schedules.

Why It Matters: Flight cancellations affect more than passengers.

Saudi businesses rely on international aviation to move employees, executives, technical specialists and customers. Tourism and religious travel also depend on reliable connections.

Even when an airport is operational, continued airline suspensions can increase travel costs and complicate business planning.

What To Watch: Whether IndiGo resumes its Jeddah, Dammam and Madinah services after October 27, and whether other international carriers shorten their suspensions.

Riyadh's international business calendar is shrinking as five major conferences and exhibitions move into 2027, raising questions about the impact on hotels, airlines and the Kingdom's events industry.

The Deal: Saudi Arabia has postponed the United Nations World Data Forum and the Saudi Statistics Forum, originally scheduled for November 9–12, until next year.

The announcement follows the postponement of three other major business gatherings:

The Bigger Picture: The postponements come amid regional security concerns and disruptions to international air travel. International conferences generate business far beyond their venues.

Hotels, airlines, restaurants, transport operators and event contractors depend on the visitors and commercial activity these gatherings attract.

The United Nations World Data Forum alone is expected to attract more than 20,000 participants, according to Arab News. Postponing major events could defer spending that Riyadh businesses expected to receive in the final quarter of 2026.

What To Watch: Saudi Arabia is scheduled to host the AFC Asian Cup in January 2027, raising questions about whether the conflict will ease before the tournament or whether organizers might consider concentrating matches in cities such as Jeddah, where international air access remains available.

Any changes would depend on security conditions, flight operations and decisions by football authorities. No venue changes have been announced.

OIL AT $120: Brent closed Friday at $116.72. Monday's reopening will show whether traders push prices toward $120 or take profits after three consecutive weekly gains.

THE SAUDI MARKET: Tadawul resumes trading Sunday after eight consecutive weekly declines. Investors will be watching whether stronger corporate earnings can attract buyers following Thursday's close at 9,695.86 points.

THE ARAMCO PIPELINE: Saudi Arabia is examining ways to expand its East-West pipeline capacity toward 10 million barrels per day. Additional capacity could reduce dependence on vulnerable export routes, although the expansion would require time and investment.

AIRLINE RETURNS: October 27 is the next important date for IndiGo services to Jeddah, Dammam and Madinah. Riyadh flights remain suspended through October 31.

CORPORATE EARNINGS: The Capital Market Authority's November 11 deadline for Q3 results is approaching. Watch whether higher energy, insurance and shipping costs begin appearing more widely in Saudi company earnings.

The news doesn't stop here. Neither do we. See you tomorrow.