Oil Updates — Crude edges higher; Exxon safely contains fire at refinery; Impact Oil & Gas prepares to sell stake
Updated 07 June 2022
Nirmal Narayanan
RIYADH: Oil prices inched higher on Tuesday on expected demand recovery in China as it relaxed tough COVID curbs and doubts a higher output target by OPEC+ producers would ease tight supply.
Brent crude futures were up 19 cents, or 0.2 percent, at $119.70 barrel at 0050 GMT.
US West Texas Intermediate crude futures were up 25 cents, or 0.2 percent, at $118.75 a barrel. The benchmark hit a three-month high of $120.99 on Monday.
Exxon says it has safely contained fire at Fawley refinery unit
Exxon Mobil Corp. has safely contained a fire at one of the units at its 270,000 barrel-per-day Fawley oil refinery in Britain, the oil major said in a statement on Tuesday.
“We may continue to use our flare in order to safely manage ongoing operations,” Exxon said, without specifying the unit involved.
Impact Oil & Gas prepares to sell stake in Namibian offshore block
Impact Oil & Gas is considering selling its 20 percent stake in a large block in deep water off the coast of Namibia where TotalEnergies made a significant oil discovery this year, four industry sources told Reuters.
Impact, which is privately owned and focused on exploration in Africa, has hired investment bank Jefferies to prepare a sale process for its stake in Block 2913B, which is estimated to be worth $500 million to $1 billion, the sources said.
TotalEnergies, which operates the field, said in February it made the discovery in the Venus-X1 well, the second offshore find this year in the southern African country which hopes to become the continent’s newest oil producer.
Impact Oil & Gas, whose investors include Toronto-listed Africa Oil and South Africa-based Hosken Consolidated Investments, declined to comment.
“We are currently looking forward to participating in the Venus appraisal program later this year,” a company spokesperson said in a statement.
Gulf visitor spending to hit $224bn by 2034, GCC-Stat says
Updated 7 sec ago
MIGUEL HADCHITY
RIYADH: Visitor spending in Gulf Cooperation Council nations is projected to reach $223.7 billion by 2034, driven by economic diversification, mega-projects, infrastructure upgrades, and relaxed visa policies, new data showed.
According to the GCC Statistical Center, as reported by Emirates News Agency – WAM, inbound visitor spending is expected to contribute 13.4 percent to the region’s total exports — underscoring tourism’s growing role in Gulf economies seeking to reduce dependence on oil.
This comes as GCC countries, led by Saudi Arabia, ramp up efforts to diversify their economies by investing in tourism. Central to Saudi Vision 2030 is a goal to raise tourism’s share of gross domestic product from 3 to 10 percent and attract 150 million annual visits, with mega-projects like NEOM spearheading the shift.
The WAM report stated: “The centre also indicated that GCC countries are achieving steady progress in many tourism-related indicators.”
It added: “The data demonstrate that total international visitor spending in GCC countries amounted to $135.5 billion in 2023, with a 28.9 percent increase compared to the figures recorded in 2019.”
GCC countries also lead the Middle East and North Africa region in safety and security, outperforming the regional average of 5.86 points on a scale of 1 to 7.
Additionally, all six Gulf states rank among the top Arab nations in terms of passport power, reinforcing their global travel competitiveness. The findings underscored the GCC’s growing appeal as a premier tourism and business destination.
This tourism boom aligns with broader economic diversification plans as oil-reliant nations shift their focus toward hospitality, entertainment, and business travel. Additionally, more flexible visa policies and improved infrastructure — such as modern airports and strong safety standards — are helping the region gradually become more attractive to international tourists, offering an alternative to traditional destinations like Europe and Asia.
The GCC’s geographic advantage as a bridge between East and West, coupled with investments in aviation, has turned the region into a global transit and tourism hotspot.
All GCC nations are collectively transforming into a global tourism powerhouse, each leveraging unique strengths under ambitious national strategies.
According to a report by consultancy firm Roland Berger, Saudi Arabia leads with Vision 2030, combining religious pilgrimage with giga-projects like NEOM.
The UAE counters with its Tourism Strategy 2031, doubling down on its established formula of luxury experiences and cultural fusion, aiming for 40 million hotel guests.
Qatar, building on its World Cup, is refining its urban tourism appeal, while Oman bets on natural beauty to attract 11 million annual visitors.
Even smaller players like Bahrain and Kuwait are making strategic moves — Bahrain by leveraging Formula 1 to boost leisure tourism and Kuwait through investments in entertainment infrastructure.
Investors brace for oil price spike, rush to havens after US bombs Iran nuclear sites
Updated 22 June 2025
Reuters
NEW YORK: A US attack on Iranian nuclear sites could lead to a knee-jerk reaction in global markets when they reopen, sending oil prices higher and triggering a rush to safety, investors said, as they assessed how the latest escalation of tensions would ripple through the global economy.
The attack, which was announced by President Donald Trump on social media site Truth Social, deepens US involvement in the Middle East conflict. That was the question going into the weekend, when investors were mulling a host of different market scenarios.
In the immediate aftermath of the announcement, they expected the US involvement was likely to cause a selloff in equities and a possible bid for the dollar and other safe-haven assets when trading begins, but also said much uncertainty about the course of the conflict remained.
Trump called the attack “a spectacular military success” in a televised address to the nation and said Iran’s “key nuclear enrichment facilities have been completely and totally obliterated.” He said the US military could go after other targets in Iran if the country did not agree to peace.
“I think the markets are going to be initially alarmed, and I think oil will open higher,” said Mark Spindel, chief investment officer at Potomac River Capital.
“We don’t have any damage assessment and that will take some time. Even though he has described this as ‘done,’ we’re engaged. What comes next?” Spindel said.
“I think the uncertainty is going to blanket the markets, as now Americans everywhere are going to be exposed. It’s going to raise uncertainty and volatility, particularly in oil,” he added.
Spindel, however, said there was time to digest the news before markets open and said he was making arrangements to talk to other market participants.
Oil prices, inflation
A key concern for markets would center around the potential impact of the developments in the Middle East on oil prices and thus on inflation. A rise in inflation could dampen consumer confidence and lessen the chance of near-term interest rate cuts.
“This adds a complicated new layer of risk that we’ll have to consider and pay attention to,” said Jack Ablin, chief investment officer of Cresset Capital. “This is definitely going to have an impact on energy prices and potentially on inflation as well.”
While global benchmark Brent crude futures have risen as much as 18 percent since June 10, hitting a near five-month high of $79.04 on Thursday, the S&P 500 has been little changed, following an initial drop when Israel launched its attacks on Iran on June 13.
Before the US attack on Saturday, analysts at Oxford Economics modeled three scenarios, including a de-escalation of the conflict, a complete shutdown in Iranian oil production and a closure of the Strait of Hormuz, “each with increasingly large impacts on global oil prices.”
In the most severe case, global oil prices jump to around $130 per barrel, driving US inflation near 6 percent by the end of this year, Oxford said in the note.
“Although the price shock inevitably dampens consumer spending because of the hit to real incomes, the scale of the rise in inflation and concerns about the potential for second-round inflation effects likely ruin any chance of rate cuts in the US this year,” Oxford said in the note, which was published before the US strikes.
In comments after the announcement on Saturday, Jamie Cox, managing partner at Harris Financial Group, agreed oil prices would likely spike on the initial news. But Cox said he expected prices to likely level in a few days as the attacks could lead Iran to seek a peace deal with Israel and the US.
“With this demonstration of force and total annihilation of its nuclear capabilities, they’ve lost all of their leverage and will likely hit the escape button to a peace deal,” Cox said.
Economists warn that a dramatic rise in oil prices could damage a global economy already strained by Trump’s tariffs.
Still, any pullback in equities might be fleeting, history suggests. During past prominent instances of Middle East tensions coming to a boil, including the 2003 Iraq invasion and the 2019 attacks on Saudi oil facilities, stocks initially languished but soon recovered to trade higher in the months ahead.
On average, the S&P 500 slipped 0.3 percent in the three weeks following the start of conflict, but was 2.3 percent higher on average two months following the conflict, according to data from Wedbush Securities and CapIQ Pro.
Dollar woes
An escalation in the conflict could have mixed implications for the US dollar, which has tumbled this year amid worries over diminished US exceptionalism.
In the event of US direct engagement in the Iran-Israel war, the dollar could initially benefit from a safety bid, analysts said.
“Do we see a flight to safety? That would signal yields going lower and the dollar getting stronger,” said Steve Sosnick, chief market strategist at IBKR in Greenwich, Connecticut. “It’s hard to imagine stocks not reacting negatively and the question is how much. It will depend on Iranian reaction and whether oil prices spike.”
Why the world can’t afford a blockade in the Strait of Hormuz
Even the mere suggestion that Iran could close the strait if the US joins Israeli strikes has sent oil prices soaring
Disruption to this strategic waterway could destabilize economies and trigger a new energy crisis, analysts warn
Updated 22 June 2025
Miguel Hadchity
RIYADH: As the conflict between Israel and Iran intensifies, attention has turned to the Strait of Hormuz — a narrow, 33-kilometer-wide stretch of water separating Oman and Iran carrying a fifth of the world’s daily oil supply.
While this strategic waterway remains open for now, analysts have told Arab News any further escalation could put the vital shipping route at risk if Iran chooses to impose a blockade or attacks vessels.
A little over a week into the confrontation, which began on June 13 when Israel began striking Iran’s nuclear sites, scientists, military commanders and cities, daily exchanges of fire have killed hundreds.
Now, with threats of a maritime blockade looming should the US decide to join the conflict on Israel’s side, global energy markets are on edge. Any disruption could send prices skyrocketing, destabilize economies and trigger a new energy crisis.
“The Strait of Hormuz is not just a waterway; it is the artery of global energy. Any blockade would trigger a chain reaction the global economy is not prepared for,” Saudi geopolitical analyst Salman Al-Ansari told Arab News.
According to the US Energy Information Administration, 20 million barrels of oil — 20 percent of global consumption — pass through the Strait of Hormuz every day, along with one-fifth of the world’s liquefied natural gas trade, primarily from Qatar.
The oil lane is so vital because no real alternatives exist. Most Gulf oil cannot be rerouted without massive delays. It is the only deep-water route capable of handling the world’s largest crude tankers.
This handout natural-colour image acquired with MODIS on NASAs Terra satellite taken on February 5, 2025 shows the Gulf of Oman and the Makran region (C) in southern Iran and southwestern Pakistan, and the Strait of Hormuz (L) and the northern coast of Oman (bottom). (Photo by NASA Earth Observatory / AFP)
The EIA has estimated that 84 percent of its crude flows to Asia, with China, India, Japan and South Korea as top buyers.
In February last year, the Washington-based Center for Security Policy analyzed Iran’s escalating activity in the Strait of Hormuz and said 76 percent of the crude oil transiting the waterway was destined for Asian markets.
When geopolitical tensions spiked over the past week after Iranian retaliatory strikes on Israel, Brent crude surged from $69 to $74 per barrel in a single day — even though no ships were blocked.
Jassem Ajaka, an economist and professor at the Lebanese University, said this shows just how sensitive markets are to the mere suggestion of instability.
“The closure of the Strait of Hormuz will inevitably lead to a rise in the price of a barrel of oil to over $100, meaning the price will increase by about $25 in a single jump — something the global economy is not accustomed to,” Ajaka told Arab News.
An Iranian Nasr missile is fired from a navy warship during a military exercise in the Gulf of Oman, near the strategic strait of Hormuz in southern Iran. (Iranian Army handout via AFP/File)
He added: “Oil is a strategic and vital commodity, and when its price rises, inflation will rise with it because it is involved in 95 percent of other goods. The extraction of raw materials, the manufacturing of food products and other items will see their prices increase.”
Al-Ansari noted that “with Iran and Israel already in direct confrontation, the risk of escalation in this critical corridor is dangerously real. Iran sees the strait as its ultimate pressure point. Shutting it down would ignite a global oil shock, push inflation higher, and send vulnerable economies into panic.”
Ajaka explained high oil prices would confront central banks worldwide with a dilemma over whether to lower or raise interest rates. He added insurance prices would rise, contributing to inflation, and that it would also cause disruptions in supply chains across several countries.
“In the case of Lebanon, for example, it would result in a complete electricity blackout, as the country relies entirely on fuel oil coming from Iraq,” he added.
Saudi Arabia, the world’s largest oil exporter, moved 5.5 million barrels per day through Hormuz last year. That is 38 percent of total crude flows in the strait, according to tanker tracking data produced by the London-based real-time insights delivery firm, Vortexa.
While the Kingdom has contingency pipelines, they are not a perfect solution. The East-West Pipeline, with a capacity of 7 million barrels per day, can divert crude to the Red Sea, but it is already running near full capacity due to recent Houthi attacks on shipping.
The UAE’s Fujairah Pipeline, with 1.8 million barrels per day capacity, is also heavily used, leaving little to spare.
Iran’s Goreh-Jask Pipeline, designed for 300,000 barrels per day, is barely operational, having handled just 70,000 barrels per day before shutting down in late 2024.
If the Strait of Hormuz were blocked, the EIA said Saudi Arabia and the UAE could only reroute about 2.6 million barrels per day — far less than the 20 million that normally passes through.
Given that the economies of most Gulf countries, particularly Saudi Arabia, rely heavily on oil exports, a closure of the Strait of Hormuz would deal a severe blow to their economic stability, according to Ajaka. “The extent of the financial damage would hinge on how long the strait remains blocked, with prolonged disruptions likely triggering budget deficits across the region,” he said.
For energy-hungry Asian economies, a blockade would be catastrophic.
This image grab taken from a video provided by Iran's Revolutionary Guard official website via SEPAH News on July 20, 2019, shows Iranian Revolutionary Guard Corps boarding the British-flagged tanker Stena Impero in the Strait of Hormuz. (AFP/File)
“This narrow stretch carries nearly a third of the world’s seaborne oil. Its closure would cripple global trade routes, choke energy supplies and slam the brakes on economic growth from Asia to Europe,” said Al-Ansari.
China relies on the Strait of Hormuz for nearly half its crude imports. India, Japan, and South Korea would face severe shortages, forcing emergency releases from strategic reserves. Global shipping costs would explode as tankers would need to take longer routes around Africa.
“The first Asian economy to be affected by any closure of the Strait of Hormuz would be China,” said Ajaka. “If the repercussions of the strait’s closure spill over into multiple economies, it could lead to a global recession — posing another challenge in terms of how to revive the global economy.”
The US is less vulnerable, importing only half a million barrels per day from the Gulf, equivalent to 7 percent of total US imports. But it would still suffer from skyrocketing global prices.
Al-Ansari emphasized that the crisis is not merely about oil: “It is about the fragile balance that keeps markets stable and societies moving.”
Iran has historically threatened to close the Strait of Hormuz but has never done so. In a recent op-ed for Arab News, Abdulaziz Sager, founder and chair of the Gulf Research Center, said a full closure “would harm Iran’s own economy given that it relies on the waterway for its oil exports.”
This combination of file pictures created on July 22, 2019, shows Iranian soldiers taking part in a military exercise in the Strait of Hormuz on April 30, 2019 (up) and the amphibious assault ship USS Boxer (LHD 4) receiving a vertical replenishment-at-sea in the Arabian Sea on July 14, 2019. (AFP/US Navy/Keypher)
Despite Iran’s heavy reliance on the waterway, Behnam Saeedi, a member of the parliament’s National Security Committee presidium, was quoted by Mehr news agency on Thursday as saying a blockade remained on the table.
“Iran has numerous options to respond to its enemies and uses such options based on what the situation is,” he said. “Closing the Strait of Hormuz is one of the potential options for Iran.”
Mehr later quoted another lawmaker, Ali Yazdikhah, as saying Iran would continue to allow free shipping in the strait and in the Gulf so long as its vital national interests were not at risk.
“If the US officially and operationally enters the war in support of the Zionists (Israel), it is the legitimate right of Iran in view of pressuring the US and Western countries to disrupt their oil trade’s ease of transit,” said Yazdikhah.
An image grab taken from a video released by the Iranian Revolutionary Guards on July 18, 2019, reportedly shows the Panamanian-flagged tanker Riah, that was detained by Iran's Revolutionary Guards, in the highly sensitive Strait of Hormuz. (AFP/File)
However, it is not a decision Iran would take lightly.
“If Iran closes the Strait of Hormuz, it will undoubtedly lose economically and militarily,” said Ajaka. “Any country that wants to wage war will lose if it does not have foreign currency reserves, as war depletes these reserves — preventing it from making the decision to close the strait.
“The only circumstances that might lead Iran to close the Strait of Hormuz are if it feels its regime is on the verge of collapse,” he added.
Iranian troops take part in a military drill in Makran beach on the Gulf of Oman, near the Hormuz Strait. (Iranian Army handout via AFP/File)
As Iran already seems to have been backed into a corner, there is every chance it could take this final leap. As Al-Ansari said: “Iran is already economically crippled and is facing an existential reality. The scenario of closing the strait should never be ruled out.”
Past incidents have shown the global impact of regional events. In 2019, attacks on Saudi tankers near Fujairah and the Abqaiq drone strikes briefly cut 5 percent of the global oil supply. World powers, therefore, have a major interest in keeping the strait open.
“Any closure of the Strait of Hormuz would prompt military intervention by the US and the UK,” said Ajaka.
On June 17, US officials informed The New York Times that Iran had positioned missiles and military assets for potential strikes on American bases in the Middle East if the US entered the conflict.
The aircraft carrier USS Abraham Lincoln transits the Strait of Hormuz as an MH-60S Sea Hawk helicopter lifts off from the flight deck on November 19, 2019. (AFP/File)
Other officials also warned Iran could resort to mining the Strait of Hormuz in the event of an attack — a strategy designed to trap US warships in the Persian Gulf.
In the event of a blockade, Ajaka suggested Western and Asian nations would likely tap into strategic petroleum reserves to mitigate immediate shortages.
However, he added this would only provide temporary relief, as non-OPEC countries have already maxed out their production capacity, leaving OPEC members as the only potential source of additional supply.
“If the strait is closed and oil prices rise, oil-producing countries, including Saudi Arabia, may resort to halting production cuts and instead increase output to curb the sharp rise in prices,” he said.
“One other possible measure would be for the US to ease restrictions on oil-producing countries like Venezuela to increase oil supply in the market.”
Nevertheless, Ajaka said: “The core position of oil — and the fundamental reason for the necessity of security in the Middle East — is that the Arabian Gulf must remain the ultimate guarantor.”
Formula 1 turbocharges Saudi economic diversification drive
KSA is deepening its investment in the sport as part of its strategy to stimulate economic activity
Updated 21 June 2025
MOHAMMED AL-KINANI
JEDDAH: Saudi Arabia is accelerating its push to diversify its economy by turning to major international events such as Formula 1, as the Kingdom uses global motorsports to support its non-oil goals.
Since hosting its first Grand Prix in 2021, the Kingdom has funneled more than $6 billion into its sports industry, part of a broader plan to boost tourism, create jobs, and raise non-oil activities to 52 percent of gross domestic product — a 20 percent jump since the launch of Vision 2030.
With plans underway to move the race to Qiddiya City between 2027 and 2029, the Kingdom is deepening its investment in the sport as part of a broader strategy to stimulate economic activity and position itself as a global hub for elite sports and entertainment.
High-profile events such as the Formula 1 Grand Prix in Jeddah exemplify how international sporting platforms are being used to stimulate tourism and highlight the Kingdom’s economic transformation.
Tamer Al-Sayed, chief financial officer at the Future Investment Initiative Institute, told Arab News that Formula 1 was never just about cars on a track. “It was a high-velocity statement. A signal to the world that Saudi Arabia is playing a new game — and playing to win,” he said.
Formula 1 has experienced a significant rise in popularity, with its global fan base reaching 826.5 million and viewership climbing to 1.6 billion in 2024, according to a recent report by PwC titled “Saudi Arabia’s motorsport ambition – Technology, investment and the future of racing.”
The global consultancy firm’s report noted that beyond Formula 1, motorsports are expanding into electric racing and other formats such as sports car and off-road competitions, driven by technological innovation and a worldwide push for sustainability.
Global popularity surged after Liberty Media’s 2017 acquisition of Formula 1 and the 2019 Drive to Survive series, which drew younger, more diverse audiences — doubling US viewership on ESPN and boosting sponsorship revenue to $632 million in 2024, according to PwC.
Economic impact
Flagship international events in Saudi Arabia, like the Formula 1 Grand Prix, are playing a pivotal role in driving tourism, stimulating local commerce, and showcasing the Kingdom’s growing appeal as a global destination.
According to PwC’s report, Saudi Arabia’s strategic investments in motorsports are positioning the Kingdom as a key player in the industry’s future.
The report said Saudi Arabia is aggressively cementing its role in motorsports’ future.
“The Kingdom has committed over $6 billion to its sports industry since 2021, fueling the development of world-class venues like the Jeddah Corniche Circuit and the upcoming Qiddiya Speed Park,” it added.
This global expansion reflects the sport’s soaring popularity, especially among younger audiences and emerging markets. Saudi Arabia has managed to secure a long-term position in that landscape.
Yaseen Ghulam, associate professor of economics and director of research at Al-Yamamah University
However, the report emphasized that the success of a modern motorsport circuit relies not only on financial investment but also on innovation in fan engagement, race operations, and digital broadcasting to ensure long-term success.
With the Kingdom and the wider region increasing their investment in motorsports, new opportunities for economic growth and innovation are unfolding.
“As Saudi Arabia and the broader MENA region invest in motorsports and advanced racing technologies, the opportunity to commercialize and expand these innovations into other industries grows exponentially,” the PwC’s report said.
Al-Sayed noted that the economic ripple effects of events like Formula 1 have moved beyond anecdotal observations and are now supported by measurable data.
“In pure numbers: Since the first Saudi Grand Prix in 2021, tourism linked to the event has driven six-figure visitor volumes annually. Hotels hit peak occupancy. Flights sell out. Local businesses — from luxury brands to food trucks — ride that wave. These aren’t soft indicators; they’re measurable economic inputs,” he added.
More importantly, Al-Sayed said, this is not a one-off surge but rather a case study in how a flagship event can anchor a broader sector.
“Entertainment and tourism — both once peripheral — are now pushing serious weight in the non-oil GDP mix. You can see the reflection in the Ministry of Tourism’s own targets: 150 million annual visitors by 2030, with sports and cultural events as core levers,” he added.
As for the event’s impact on employment, the chief officer said that it extends beyond temporary jobs, highlighting the emergence of an entire ecosystem encompassing event production, hospitality, and logistics, as well as digital media, security, and sponsorship management.
“Each Grand Prix fuels demand across this chain, and each year the local capability strengthens. So yes, F1 was expensive. But so was missing out on the future,” he said.
Al-Sayed expressed confidence that in a decade, the question will not be why Saudi Arabia invested heavily in sports and entertainment, but rather how it anticipated the trend ahead of the rest of the world.
Yaseen Ghulam, associate professor of economics and director of research at Al-Yamamah University in Riyadh, said that Formula 1 is more than just a sport — it serves as a global platform for economic influence and visibility.
“The Las Vegas Grand Prix generated over $1.2 billion in economic activity, with racegoers spending nearly three times more than average tourists,” he said, noting that similar benefits are beginning to emerge in Saudi Arabia.
He also mentioned that hotel prices in Jeddah during the 2021 Formula 1 race exceeded $450 per night, reflecting high demand and a significant impact on the local tourism and hospitality sectors.
“This global expansion reflects the sport’s soaring popularity, especially among younger audiences and emerging markets. Saudi Arabia has managed to secure a long-term position in that landscape,” Ghulam added.
The associate professor went on to say that global sports events, such as Formula 1 or the Olympics, bring pride, increased productivity, and deliver higher well-being to nations through buzz, branding, and business potential.
“However, economic analysis of the costs and benefits, as well as financial risks, of hosting F1 is often overlooked. Saudi Arabia has been hosting F1 events exceptionally well since 2021,” he said.
From Jeddah to Qiddiya
The Qiddiya megaproject in Riyadh, announced in March 2024, will feature one of the world’s most innovative motorsport tracks, with the configurable Speed Park Track located at the heart of Qiddiya City, positioning the Kingdom as a global racing destination.
Al-Sayed called Jeddah the proof of concept and Qiddiya the blueprint for Saudi Arabia’s motorsports strategy.
He elaborated further on the success of the Jeddah circuit, noting: “When we launched the Jeddah circuit, the global motorsports community raised its eyebrows — and then had to admit it delivered. The fastest street circuit in F1, with a breathtaking Red Sea backdrop, timed perfectly with the Kingdom’s rising international profile.”
Al-Sayed called Qiddiya a masterstroke — a vision beyond a venue — designed to place Formula 1 at its core while driving growth in infrastructure, real estate, tourism, and creative industries.
“It is one of those projects where the economic spillover is the point,” he said.
Echoing Al-Sayed’s remarks, Ghulam noted that when Qiddiya hosts its first Saudi Grand Prix — possibly in 2029 — it will undoubtedly make waves, following the strong precedent set by Jeddah.
“It would not be surprising if Saudi Arabia opted to hold two races in the near future in accordance with Saudi Vision 2030, since F1 now hosts three races in the US – Miami, Austin, and Vegas,” Ghulam concluded.
Why tech startups should choose Riyadh as their MENA launchpad
Saudi Arabia offers startups access to a high-spending consumer base and a gateway to regional expansion
Updated 21 June 2025
Miguel Hadchity
RIYADH: Riyadh is becoming a leading destination for tech startups in the Middle East, fueled by Saudi Arabia’s Vision 2030 reforms, an advanced infrastructure, and robust government-backed incentives.
The Saudi information and communication technology market is projected to reach $54.90 billion in 2025 and $82.51 billion by 2030 at a compound annual growth rate of 8.49 percent, according to an analysis by Mordor Intelligence.
This growth highlights the Kingdom’s increasing prominence as a regional innovation hub.
At the heart of this transformation is Saudi Arabia’s Vision 2030 economic diversification plan, which has placed technology at the forefront of its strategy. Major initiatives, such as NEOM, a $500-billion smart city powered by artificial intelligence and renewable energy, and Riyadh Tech Valley, a dedicated hub for AI, the Internet of Things, and robotics startups, are driving this momentum.
Government programs such as the Saudi Unicorns Program and Tech Growth Financing provide critical support for scaling businesses, further cementing Riyadh’s appeal.
Emmanuel Durou, technology, media and telecommunications leader at Deloitte Middle East, highlighted three key operational factors behind Riyadh’s startup success. “First, Saudi Arabia’s advanced digital infrastructure has significantly accelerated startup growth,” he told Arab News in an interview.
The 2018 Bankruptcy Law emphasizes debt restructuring over liquidation, providing cash-strapped startups a mechanism to negotiate with creditors early before default.
Jasem Al-Anizy, partner in corporate finance at Addleshaw Goddard KSA
Government-led digital transformation initiatives have created a robust technological backbone, with 14 percent of Saudi broadband users enjoying speeds over 1G bits per second — far surpassing the 4 percent seen in markets like the UK. “This infrastructure supports rapid innovation and scaling up,” he added.
The second factor, according to Durou, is the Kingdom’s strategic focus on developing local talent pipelines. “As many as 86 percent of Saudi universities now provide undergraduate programs in AI, 56 percent offer master’s degrees, and doctoral opportunities stand at 9 percent,” he noted.
The Deloitte leader emphasized that institutions like King Abdullah University of Science and Technology play a pivotal role in supplying startups with skilled, technology-ready talent.
Lastly, Durou pointed to the Kingdom’s supportive business environment, which includes government incentives, substantial funding mechanisms like venture capital and private equity, and vibrant incubator ecosystems such as Garage 46 and Impact 43.
He also shed light on the Kingdom’s high consumer adoption rates of advanced technologies, particularly Gen AI.
Deloitte’s recent survey outlined Saudi Arabia’s high awareness of the technology at 76 percent, with usage frequencies of 20 percent daily and 32 percent weekly — significantly higher than the UK, he added.
When comparing Riyadh’s startup scaling environment to Dubai’s, Durou observed distinct strengths in each.
“In Riyadh, government-driven initiatives such as Saudi Vision 2030 have significantly streamlined regulatory processes, enabling startups to reduce their time-to-market,” he said, adding that “extensive support from local incubators, accelerators, and dedicated funding programs serve to further accelerate product development and launch timelines.”
Durou noted that customer acquisition costs in Riyadh are comparatively lower, driven by the ongoing surge in digital adoption among consumers and supported by targeted government-backed marketing initiatives.
The fintech sector, in particular, benefits from robust governmental support, which helps meet rising local demand. Meanwhile, e-commerce growth is further propelled by high Internet penetration and shifts in consumer behavior.
“Dubai offers rapid market entry facilitated by the globally recognized Dubai International Financial Centre and a mature, efficient regulatory environment. Although high market competition can drive up customer acquisition costs in Dubai, it’s balanced by an expansive and diverse customer base,” he explained.
Durou highlighted that the DIFC ecosystem offers fintech startups access to government incentives, which greatly enhance their growth prospects. He also emphasized that Dubai’s strategic geographic position as a global trade hub, along with its advanced logistics and warehousing capabilities, significantly accelerates the expansion of e-commerce.
Jasem Al-Anizy, partner in corporate finance at Addleshaw Goddard KSA, shed light on the legal structures that are proving effective in the Kingdom.
“Saudi startups have historically preferred an offshore ring-fencing of intellectual property assets by holding and protecting intellectual property interests in a standalone sister company based in an offshore jurisdiction,” he explained to Arab News.
“This has helped startups in scaling globally and simplifies exit strategies,” Al-Anizy said.
Government-driven initiatives have significantly streamlined regulatory processes, enabling startups to reduce their time-to-market.
Emmanuel Durou, technology, media and telecommunications leader at Deloitte Middle East
However, with stronger business and intellectual property laws, there is increasing trust in local company structures like the Simplified Closed Joint Stock Co.
Al-Anizy also highlighted the advantages of Riyadh’s bankruptcy laws for tech startups facing liquidity challenges. The 2018 Bankruptcy Law emphasizes debt restructuring over liquidation, providing cash-strapped startups a mechanism to negotiate with creditors early before default, he said.
The law was introduced to provide guidance on the adoption and implementation of bankruptcy proceedings. Despite its name, the primary objective of the Bankruptcy Law is not liquidation but rather the rescue of insolvent businesses through reorganization and financial restructuring.
Al-Anizy said that this sophisticated regime demonstrated in recent large-scale restructurings, has garnered recognition from founders and investors alike. On the dispute side, mediation and the Saudi Center for Commercial Arbitration are becoming preferred avenues for resolution.
For foreign founders setting up their MENA Headquarters in Riyadh, Al-Anizy stressed the importance of clear contractual considerations. “Founders having an unclear picture of their share cap table, equity vesting, or the conversion of any issued SAFE/KISS notes is an easily avoidable way to lose investor confidence,” he warned.
A Simple Agreement for Future Equity is an investment instrument that allows startups to raise capital without immediately determining a valuation, converting it into equity upon a future-priced round or liquidity event. Similarly, a Keep It Simple Security operates as either a convertible note or a SAFE-like agreement, offering standardized terms for early-stage funding.
Both are designed to streamline early investments while deferring valuation discussions, but founders must track their terms, such as discount rates, valuation caps, and conversion triggers, to maintain transparency with investors.
Al-Anizy also advised explicit contractual clauses to ensure intellectual property rights are clearly vested in the company, safeguarding the business and maintaining investor trust.
Riyadh has become a magnet for multinational corporations, with around 600 foreign companies establishing their regional headquarters in the city since the launch of the Saudi Program for Attracting Regional Headquarters in 2021.
Spearheaded by the Ministry of Investment and the Royal Commission for Riyadh City, this initiative is a cornerstone of Vision 2030’s goal to position Saudi Arabia as a global business hub.
The program offers compelling incentives, including a 30-year tax relief package with 0 percent corporate and withholding taxes, streamlined setup processes, and access to world-class infrastructure.
Riyadh’s strategic location at the crossroads of Asia, Africa, and Europe, combined with its skilled workforce and economic stability, has made it the top choice for multinationals looking to expand in the region.
Riyadh’s appeal is further bolstered by business-friendly policies, including 100 percent foreign ownership in key sectors, tax incentives, and streamlined licensing through the Saudi Business Center. Startups also benefit from partnerships with major corporations like Aramco and STC, as well as accelerator programs from Flat6Labs and 500 Global.
With a population of 36 million and the largest economy in the Middle East and North Africa, Saudi Arabia offers startups access to a high-spending consumer base and a gateway to regional expansion. The Kingdom’s advancements in technology were recognized in the 2024 Global Innovation Index, where it secured the 47th spot among 132 countries.
Events such as the LEAP Tech Conference and Riyadh Season continue to draw global investors, while local success stories — from Tamara, Saudi Arabia’s first fintech unicorn delivering payments and banking, to Salla, an e-commerce platform empowering SMEs with digital storefronts — demonstrate Riyadh’s potential as a launchpad for high-growth companies.
