Saudi Arabia Explores Financing New Type for Logistics Sector

Saudi Arabia is currently conducting a technical study to provide public companies in the logistics services sector with new funding for “build to suit” warehouse construction projects. (Asharq Al-Awsat)
Saudi Arabia is currently conducting a technical study to provide public companies in the logistics services sector with new funding for “build to suit” warehouse construction projects. (Asharq Al-Awsat)
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Saudi Arabia Explores Financing New Type for Logistics Sector

Saudi Arabia is currently conducting a technical study to provide public companies in the logistics services sector with new funding for “build to suit” warehouse construction projects. (Asharq Al-Awsat)
Saudi Arabia is currently conducting a technical study to provide public companies in the logistics services sector with new funding for “build to suit” warehouse construction projects. (Asharq Al-Awsat)

Saudi Arabia is currently conducting a technical study to provide public companies in the logistics services sector with new funding for “build to suit” warehouse construction projects due to the high demand for this type of loan.

Specializing in providing commercial property lessees with an agreement with a developer or landowner to construct a new facility for rent, this type of financing allows for optimal use of the land and building. The lessee usually becomes the sole occupant and determines the design to meet business needs.

Sources said the Saudi Ministry of Transport and Logistics Services and the Saudi Industrial Development Fund have instructed the private sector to grant direct access to new funding for three nominated companies.

This decision follows a series of meetings held to discuss the mechanism, marking a step towards developing and enabling operating facilities in the sector.

Sources confirm that one facility has expressed interest in participating in a trial of the new funding, with two available opportunities currently under consideration.

The move aims to contribute to the development of the logistics services sector, which is experiencing a qualitative leap in Saudi Arabia, and to enable operating companies in the sector.

Prince Mohammed bin Salman, Crown Prince and Prime Minister, launched the National Strategy for Transport and Logistics Services in 2021, with the aim of positioning the Kingdom as a global logistics hub connecting three continents.

The strategy intends to upgrade all transportation services and bolster integration in the logistics services system and modern transportation patterns. This aims to support the Kingdom's comprehensive development process.

The strategy comprises a series of significant projects designed to facilitate the attainment of economic and social objectives, along with the implementation of efficient governance models to strengthen institutional operations within the system.



Oil Retreats on US Tariff Uncertainty and OPEC+ Supplies

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Retreats on US Tariff Uncertainty and OPEC+ Supplies

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices slipped on Thursday as the possibility of US tariffs being reinstated raised demand concerns ahead of an expected supply boost by major producers.

Brent crude futures fell 58 cents, or 0.8%, to $68.53 a barrel by 0942 GMT. US West Texas Intermediate crude declined 57 cents, or 0.9%, to $66.88.

Both contracts had hit one-week highs on Wednesday as Iran suspended cooperation with the UN nuclear watchdog, raising concerns the lingering dispute over its nuclear program could again devolve into armed conflict.

A preliminary trade deal between the US and Vietnam also boosted prices.

Tariff uncertainty looms large, however. The 90-day pause on the implementation of higher US tariffs ends on July 9, with several large trading partners yet to wrap up trade deals, including the European Union and Japan.

The OPEC+ group of oil producers, meanwhile, is expected to agree to raise output by 411,000 barrels per day (bpd) at its policy meeting this weekend. Adding to negative sentiment, a private-sector survey showed that service activity in China - the world's biggest oil importer - expanded at its slowest pace in nine months in June as demand weakened and new export orders declined. A surprise build in US crude inventories also highlighted demand concerns in the world's biggest crude consumer.

The US Energy Information Administration said on Wednesday that domestic crude inventories rose by 3.8 million barrels to 419 million barrels last week. Analysts in a Reuters poll had expected a drawdown of 1.8 million barrels.

The market will be watching for the US monthly employment report on Thursday, which is likely to shape expectations over the depth and timing of interest rate cuts by the Federal Reserve in the second half of the year, analysts said.

Lower interest rates could spur economic activity that would boost oil demand.