Welcome to this week’s Fortune Gulf Brief. We’ll be covering:  

Thank you for subscribing to Fortune Gulf Brief and joining our community. Given the significant news flow from the Gulf early in the week, going forward, we’re moving the newsletter from Tuesday to Wednesday to give you a fuller picture of the trends and stories that matter.

• Fortune Exclusive: The inside track on the UN-backed plan to reopen Hormuz  
• Saudi Aramco’s war windfall: Profits surge 33% 
• Saudi economy stumbles, but oil windfall softens the blow 
• Oman accelerates Vision 2040 with $1.9 billion project blitz 
• U.S. bolsters UAE AI partnership with $300 million chip funding
• And the three things we enjoyed reading this week 

Another week, another cycle of conflicting rhetoric and mixed messages on the U.S.-Iran conflict. 

Late on Sunday, Donald Trump posted on his Truth Social platform that Iran and other Middle Eastern countries had asked ‌for time to complete a deal that would lead to “the Immediate, Complete and Total” reopening of the Strait of Hormuz. Trump added that negotiations with Tehran are set to begin on Monday after he decided to halt a plan for the U.S. to launch “the biggest attack since World War II.” 

But on Monday, Iran’s foreign ministry flatly denied that it was negotiating with the U.S. or that there were any plans to do so. Iranian Foreign Ministry spokesperson, Esmaeil Baghaei said that Tehran is instead in discussions with Oman to secure a temporary safe route through the Strait of Hormuz.  

The previous day, Baghaei said that the proposed route had “no link to the Strait of Hormuz being opened or closed. That is a separate discussion.”

Is there any way out of the impasse? Maybe. The UN has developed a “mechanism” to reopen Hormuz which could resolve many of the intractable issues that both the U.S. and Iran are grappling with.  

Talking to me about the details, John Denton, secretary general of the International Chamber of Commerce (ICC), outlined what it entails and how it could work in practice.  

“What we’ve strived to do in building this mechanism is to ensure that it will be acceptable and usable by that economic ecosystem [the Strait of Hormuz]. And that requires, obviously, deconfliction of the area, as well as a commitment to the neutral governance of the area,” he said.  

You can read my interview with him here, a fascinating insight into just how complicated the war in that region has become. 

Melissa Hancock

As ever, thanks for reading, and do keep in touch with your thoughts and ideas. See you next week.
melissa.hancock@fortune.com 

Saudi Aramco profits jump as higher crude prices boost earnings 

Saudi Aramco reported a 33% jump in second-quarter profits, with higher crude prices lifting earnings despite lower sales due to the U.S.-Iran war. 

Adjusted net income rose to $33.4 billion, from $25.2 billion a year earlier, beating analysts’ profit estimates of $31.1 billion. Aramco sold its oil at $108.10 per barrel in the second quarter, compared with $66.70 per barrel a year earlier, Bloomberg reported.  

Aramco President & CEO Amin H. Nasser said that the company capitalized on “strategic infrastructure such as the East-West Pipeline, storage capacity, and export terminals” to maintain business continuity despite the “unprecedented supply disruption through the Strait of Hormuz.”  

Aramco has been ramping up fuel exports from its Red Sea refineries on its west coast. However, those shipments are now facing growing risks from Houthi attacks. 

Saudi GDP shrinks but higher oil prices ease fiscal pain 

Saudi Arabia’s economy shrank 4.8% in the second quarter, marking its first contraction since 2023 and the sharpest slowdown since the pandemic, according to the General Authority for Statistics.  

The economic contraction is in sharp contrast to the 3% growth that the Arab world’s largest economy recorded in the first quarter of the year.  

The kingdom’s non-oil economy remained a relative bright spot, expanding by 0.6% during the second quarter, but it was still a notable slowdown compared with a 2.9% expansion in the previous quarter. 

Overall, the U.S.-Iran war has weighed heavily on the kingdom’s oil sector, with oil activity plunging 24.7% in the April-June quarter. The rise in the oil price has offset some of the downside effects. 

The kingdom posted a budget shortfall of SAR34.3 billion ($9.1 billion) in the second quarter, according to the finance ministry. That compares with a SAR125.7 billion deficit in the first quarter. 

If oil prices average around $90 a barrel, Saudi Arabia’s fiscal deficit could narrow to about 5% of gross domestic product (GDP) in 2026, down from 5.8% last year, according to Mohamed Abu Basha, head of macroeconomic analysis at investment bank EFG Hermes.  

The IMF also noted last week that: “Higher oil prices are expected to more than offset lower export volumes, generating a revenue windfall.” 

Debt Down, Investment Up: Oman Speeds Up Economic Diversification

Oman agreed to back 74 projects worth $1.9 billion and issued 60 new tenders valued at $949 million during the first seven months of 2026, as the sultanate accelerated infrastructure spending to diversify its economy.  

Spread across strategic sectors including transport, healthcare and digital infrastructure, the projects support the objectives of Oman Vision 2040, its long-term economic diversification strategy. 

Among the biggest contract awards was a $521 million deal to supply pharmaceuticals, vaccines and serums. Another key project is the $410 million expansion of the Muscat Expressway, designed to ease traffic congestion and support the capital’s ongoing urban development. 

In mid-July, Future Fund Oman (FFO), an investment vehicle of the sultanate’s sovereign wealth fund, Oman Investment Authority (OIA), unveiled a portfolio of 105 strategic projects and investments worth $1.74 billion. 

The portfolio includes $585 million in commitments from FFO and about $458 million in local investment, covering sectors such as renewable energy, advanced manufacturing, tourism, healthcare, medical technology , and food industries. 

"This portfolio directs capital toward nationally prioritized sectors and strengthens Oman's appeal to global investors," said Mulham Al Jarf, the deputy president of Investment at the OIA.  

Oman more than halved its government debt to around 36% of GDP in 2025 from a peak of 68% in 2020, prompting the three major ratings agencies to upgrade the sultanate, restoring it to investment-grade status.  

On 21 July, Fitch ratings issued a report stating that: “Omani banks continue to benefit from favourable operating conditions, supported by economic growth and fairly high oil prices.” It noted that the sector’s operating environment is likely to remain resilient despite the Iran war, as Oman is the most insulated Gulf country from the conflict. 

The Big Number

U.S. backs UAE's GlobalFoundries with $300m for AI chip innovation

UAE-backed chipmaker GlobalFoundries will receive $300 million from the U.S. government to advance research and development in silicon photonics, a move aimed at making AI data centers faster and more energy-efficient. 

The chipmaker, in which Abu Dhabi sovereign wealth fund Mubadala holds a 73% majority stake, aims to boost data transfer speeds to 400 gigabits per second and achieve up to five times greater energy efficiency. Silicon photonics technology uses light instead of electrical signals.  

The $300 million announced last week will add to the $1.5 billion in funding awarded to GlobalFoundries in 2024 to expand its manufacturing facilities in Malta, New York, and Burlington, Vermont. 

The funding further strengthens the US-UAE AI partnership, aligning with the Trump administration's push to invest in technologies expected to underpin the next generation of AI infrastructure and bolster U.S. competitiveness in the global technology race with China. 

Last month, the U.S. significantly eased export restrictions on the UAE, making it much easier for approved UAE organizations to buy cutting-edge AI chips from companies such as Nvidia and AMD.   

UAE AI companies G42 and Core42 are among those that are no longer required to obtain licenses for AI chips and servers.  

Meanwhile, on Monday, Mubadala said it is committing $170 billion, or roughly 44% of its portfolio, to U.S. interests, with investments across AI, semiconductors, health care, energy, and advanced manufacturing.  

“That scale is proof of our confidence in the long-term strength of the American economy,” said Ahmed Saeed Al Calily, chief strategy and risk officer for Mubadala.  

The 3 things we enjoyed reading this week

• Tel Aviv-based Zenity has just raised $125 million, with SoftBank, Hitachi, and LG jumping in on a bet that the real AI danger isn't the models themselves but the autonomous agents now acting inside corporate systems, as my Fortune colleague Nicholas Gordon explains in this timely piece. Rather than screening prompts or auditing outputs after the fact, Zenity watches agents in real time and can block or alter their actions the moment they start acting out of scope. Sound familiar? The round lands weeks after OpenAI disclosed that two of its models escaped a sealed test environment and hacked into Hugging Face's systems.  
• Paramount Skydance finally landed its $110 billion Warner Bros. Discovery deal—only to watch it slide into a legal and costly quagmire. Starting on September 30, Paramount will be required to pay a $650 million quarterly "ticking fee" until the start of the legal battle over ownership. With even the trial date itself in dispute and Gulf sovereign funds backing much of the equity amid regional turmoil, the Ellisons may have won the bidding war only to inherit a much costlier fight.
• Esports is becoming big business in the Gulf and celebrations were in order when Abu Dhabi's Nigma Galaxy team stormed to the Esports World Cup Dota 2 quarter-finals in Paris, winning nine out of ten matches. They now sit three victories away from becoming the UAE's first-ever champions. Dota 2, for those non-aficionados amongst us, is a multiplayer “battle arena” game. Driving the success is a Lebanese duo with a great backstory (one player used to idolize the other) - which William Mullaly details in this great piece for The National. With a $75 million prize pool up for grabs, Nigma Galaxy hopes a win would signal that the Arab gaming scene is finally being taken seriously. The Esports World Cup is being held in Paris until August 23, bringing together more than 2,000 players from 200-plus clubs and more than 100 countries. “Earthshaker!” - if I am using the Dota 2 vocabulary correctly...