Saudi Arabia and Italy Boast Trade Volume of Around $10.9 Billion

Saudi and Italian officials meet during Meloni's visit to the Kingdom on Sunday. (SPA)
Saudi and Italian officials meet during Meloni's visit to the Kingdom on Sunday. (SPA)
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Saudi Arabia and Italy Boast Trade Volume of Around $10.9 Billion

Saudi and Italian officials meet during Meloni's visit to the Kingdom on Sunday. (SPA)
Saudi and Italian officials meet during Meloni's visit to the Kingdom on Sunday. (SPA)

Economic affairs were the key focus of Italian Prime Minister Giorgia Meloni’s visit to Saudi Arabia, which began on Saturday and continues until Monday. During her first official trip to the Kingdom, Meloni aims to strengthen bilateral relations and boost trade ties before heading to Bahrain.

As members of the G20, Saudi Arabia and Italy share mutual economic interests. The establishment of the Saudi-Italian Joint Committee has played a pivotal role in advancing economic, trade, and investment relations between the two countries. It has also created effective governance frameworks to foster collaboration and elevate their relationship to the level of a strategic partnership.

Strategic partnerships

Saudi Arabia is Italy’s second-largest trading partner in the region. In 2023, the trade volume between the two countries reached around $10.8 billion. Saudi imports from Italy were valued at $5.875 billion, while exports to Italy amounted to $4.921 billion, including $737 million in non-oil exports. Globally, Italy ranks as the 10th largest exporter to the Kingdom.

Both nations are working to strengthen economic and investment ties by regularly convening the Saudi-Italian Joint Business Council, increasing official and trade delegation visits, encouraging joint ventures, and organizing trade and investment events.

Currently, more than 150 Italian companies operate in Saudi Arabia, with Italy’s foreign direct investment (FDI) stock in the Kingdom exceeding $4.6 billion.

Renewable energy cooperation

Saudi Arabia and Italy are collaborating in the renewable energy sector as the Kingdom focuses on its transition to carbon neutrality. Italy, with its extensive experience in renewable energy technologies, is seeking to establish a long-term partnership with the Kingdom, a potential future leader in green hydrogen production.

In September 2023, the Saudi-Italian Investment Forum, hosted in Milan by Saudi Arabia’s Ministry of Investment in partnership with Italy’s Ministry of Enterprises and Made in Italy, resulted in the signing of 21 agreements and memorandums of understanding. They covered sectors such as traditional and clean energy, healthcare, real estate, waste management, and more.

According to the Italian government, Italy views Saudi Arabia as a key partner, especially regarding investment opportunities tied to the Kingdom’s Vision 2030. The transformative reform plan aims to diversify the Saudi economy, shifting its reliance from oil to a service-based model. It emphasizes tourism, startups, and small- and medium-sized enterprises (SMEs) in high-value-added sectors.

Saudi Arabia ranks sixth globally in terms of the number of visas issued by Italy, underscoring Italy’s position as a leading destination for Saudi tourists.

Italy is also among the top 20 countries investing in Saudi Arabia, with over 150 Italian companies holding foreign investment licenses in the Kingdom. The Saudi-Italian Investment Forum in 2023 further solidified economic ties, with the signing of 21 agreements spanning a wide range of sectors.



From Aramco's Profits to State Budget Revenue: How Do Oil Proceeds Reach Government Coffers?

A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
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From Aramco's Profits to State Budget Revenue: How Do Oil Proceeds Reach Government Coffers?

A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)

Saudi Aramco's financial results and Saudi Arabia's third-quarter budget performance report, released on the same day, revealed a divergence between the company's rising profits and declining government oil revenue recorded in the state budget.

While Aramco's net income rose 34.2% during the first nine months of 2026 to SAR 380.6 billion ($101.5 billion), government oil revenue fell 1.3% over the same period and declined approximately 23% in the third quarter alone.

Comparing the two indicators does not necessarily imply a direct relationship between the company's profits and the revenue flowing into government coffers. Corporate earnings are recognized under different accounting principles from those governing the calculation and collection of government revenue.

The financial relationship between Aramco and the government also involves multiple channels, including taxes, royalties, dividends and offsetting settlements, each with its own payment and collection schedule.

Aramco's Profits and Cash Flows

Aramco reported net income of SAR 380.6 billion ($101.5 billion) for the first nine months of 2026, compared with SAR 283.6 billion ($75.6 billion) in the corresponding period last year, an increase of 34.2%.

Adjusted net income reached SAR 368.9 billion ($98.4 billion), up from SAR 302.3 billion ($80.6 billion) a year earlier.

However, the increase in earnings was not accompanied by a comparable rise in cash generated by the company's operations, according to its financial report.

Cash flow from operating activities totaled SAR 355.8 billion ($94.9 billion), compared with SAR 357.6 billion ($95.4 billion) in the same period last year, remaining largely unchanged.

Aramco attributed this to changes in working capital, which refers to funds tied up in day-to-day operations, including outstanding sales receivables, inventories and amounts owed to or by the company.

These movements limited the extent to which higher earnings translated into operating cash flow.

Meanwhile, free cash flow increased to SAR 221.6 billion ($59.1 billion), compared with SAR 217.3 billion ($57.9 billion) a year earlier.

This metric measures the cash remaining after capital expenditures are deducted from operating cash flow. It benefited from a reduction in capital expenditures to SAR 134.2 billion ($35.8 billion), from SAR 140.3 billion ($37.4 billion) in the comparable period.

Oil Revenue in the State Budget

On the other side of the equation, Aramco's earnings growth was not mirrored by a corresponding increase in government oil revenue.

Ministry of Finance data showed that oil revenue fell 23% year on year in the third quarter to SAR 116.5 billion ($31.1 billion), compared with SAR 150.8 billion ($40.2 billion) in the same period last year.

Over the first nine months of 2026, oil revenue totaled SAR 446.3 billion ($119 billion), down from SAR 452.4 billion ($120.6 billion) in the corresponding period of 2025, representing a relatively modest decline of approximately 1.3%.

By contrast, non-oil revenue increased 8% during the nine-month period to SAR 412.5 billion ($110 billion), helping lift total budget revenue by 3% to SAR 858.9 billion ($229 billion).

In the third quarter alone, non-oil revenue rose 20% to SAR 142.6 billion ($38 billion).

The growth in non-oil revenue therefore helped cushion the impact of declining oil revenue on the government's overall income.

Third-quarter expenditure totaled SAR 343.4 billion ($91.6 billion), against revenue of SAR 259.1 billion ($69.1 billion), resulting in a quarterly budget deficit of approximately SAR 84.3 billion ($22.5 billion).

Why Don't the Figures Move in the Same Direction?

Part of the divergence between Aramco's financial results and government budget revenue stems from the different nature of the figures themselves.

The company's profits are recognized according to its accounting results, while budget figures reflect government revenue actually collected during the reporting period.

Moreover, the government's financial returns from Aramco's operations flow through several channels, including taxes, royalties and dividends, with differences in when these amounts become due and when they are paid.

Accounting profits do not necessarily translate into cash inflows during the same period. Liquidity is affected by the timing of receivables collection, inventory movements and operating payments.

This distinction is also evident in financial transactions between Aramco and the government, which are not limited to direct cash payments but include the settlement of certain mutual obligations through offsets.

For example, Aramco's cash income tax payments fell to SAR 2.8 billion (approximately $747 million) in the third quarter, compared with around SAR 51 billion ($13.6 billion) in the second quarter, as amounts due to the company from the government were settled by offsetting them against its tax obligations.

Under this mechanism, amounts owed to one party are deducted from what that party owes the other, rather than transferring the full amount in cash.

Such offsets affect both the volume of cash payments and the timing of financial transfers between Aramco and the government.

Consequently, government oil revenue does not necessarily move in the same direction as Aramco's financial results, since each is influenced by different factors and accounting mechanisms.

While the company's profits reflect its financial performance during a given period, government revenue recorded in the budget depends on the taxes, royalties and dividends due to the state, as well as the timing of their collection and settlement.

Aramco's profits may therefore increase during a period when government oil revenue is declining.

Overall, the results demonstrate Aramco's continued ability to generate strong profits and maintain substantial cash flows, supporting its capacity to sustain investment and distribute dividends to shareholders, foremost among them the Saudi government.

At the same time, growth in non-oil revenue underscores the importance of diversifying budget income sources to mitigate fluctuations in oil revenue, broaden the sources supporting public finances and advance the Kingdom's economic transformation.


Crypto Dips on Democrat Midterm Wins, Binance Hack Dents Optimism

Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
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Crypto Dips on Democrat Midterm Wins, Binance Hack Dents Optimism

Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)

Cryptocurrencies briefly dipped on Wednesday as Democrats won majorities in both the Senate and House in the US midterm elections, a potential blow to an industry that has pushed for faster deregulation for digital assets.

The sector has spent more than $300 million backing crypto-friendly Democrats and Republicans in roughly equal measure during the current and previous election cycles, hoping to pass legislation US crypto companies say will ‌put them on ‌a solid legal footing and allow them to thrive.

Bitcoin ‌briefly ⁠touched a six-week ⁠low before recovering to trade roughly flat by 0715 GMT at $78,070. Ether traded at $2,292, up just 1%.

Bitcoin has fallen by around 41% since hitting record highs above $122,000 in October 2025, bringing the value of the broader crypto market to around $2.61 trillion, according to CoinMarketCap.

The market has lost some $300 billion in value in the last month alone, as deepening concern about future returns from AI and the ⁠strain of rising borrowing costs pushed investors into less risky ‌assets such as government bonds and ‌safe-haven currencies.

Sentiment has also been hurt by the $6 billion hack of the Binance platform last ‌week, the largest heist in history.

On Tuesday, Binance customers had withdrawn ‌a net $4.72 billion from the world's largest cryptocurrency exchange since it reopened following the hack at the weekend.

"The market may be re-evaluating the risk-reward profile of crypto assets. On one hand, the string of security incidents is forcing investors to re-examine the ‌industry's security infrastructure and custody risks," Tim Sun, senior researcher at HashKey, said.

"On the other hand, potential shifts in ⁠the US political landscape ⁠could stall the progress of structural crypto legislation and institutional framework development. All of these factors leave the crypto market facing strong headwinds," he said.

US President Donald Trump, who vowed to make the United States the "crypto capital of the world" during his 2024 presidential campaign, has made his own forays into digital assets, with the launch of his "Trump" meme coin, plus his family's World Liberty Financial crypto platform, among other ventures.

The sector has seen sweeping reforms in the almost two years since Trump returned to office, including lighter enforcement and the creation of a strategic bitcoin reserve.

Washington has also allowed for easier access to banking and exchange-traded products and passed a federal stablecoin law that could help these assets move into the mainstream payments and money transfer systems.


Saudi Non-Oil Sector Expands for Seventh Straight Month

A view of Riyadh, Saudi Arabia. (Getty Images file)
A view of Riyadh, Saudi Arabia. (Getty Images file)
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Saudi Non-Oil Sector Expands for Seventh Straight Month

A view of Riyadh, Saudi Arabia. (Getty Images file)
A view of Riyadh, Saudi Arabia. (Getty Images file)

Saudi Arabia’s non-oil private sector continued to expand in October, with business activity and output growth accelerating despite a decline in the Riyad Bank Purchasing Managers’ Index (PMI) to 54.0 from 55.3 in September, according to data compiled by S&P Global.

The seasonally adjusted index remained above the neutral 50-point threshold for the seventh consecutive month, signaling continued improvement in operating conditions. Although it eased from September’s seven-month high, October’s reading was the second-highest since February.

Output growth accelerated to a strong pace from the previous month, supported by improving underlying demand and increased sales and marketing efforts. New orders also continued to rise, although more slowly than in September and at a rate below the survey’s historical average.

Domestic demand remained the main driver of growth, while export orders declined for the eighth consecutive month, with the contraction accelerating.

Survey respondents cited shipping disruptions, higher transport and insurance costs, and competitive market conditions as factors weighing on overseas sales. About a quarter of firms reported a decline in export orders in October.

Employment increased for the fourth consecutive month, although hiring remained modest and slowed from September. Backlogs of work rose slightly for the second straight month, reflecting higher sales and some delays in supplier deliveries.

Supplier delivery times improved only marginally, marking the weakest improvement since April, as disruptions to maritime routes continued to affect shipments. Some businesses consequently increased their reliance on domestic suppliers to secure production inputs.

Cost pressures intensify

Cost pressures mounted at the start of the final quarter, with purchase prices rising at their fastest pace in six months, driven by higher shipping, insurance, raw material and energy costs. Staff cost inflation also reached its highest level since February.

Despite rising input costs, the rate of increase in selling prices slowed to a nine-month low as companies offered larger discounts amid intensifying competition. Nevertheless, selling prices continued to rise at a strong pace.

Commenting on the findings, Naif Al-Ghaith, chief economist at Riyad Bank, said the non-oil private sector demonstrated resilience in October, supported by sustained domestic demand, stronger business activity and continued employment growth.

He noted that the PMI’s position above the 50-point threshold indicated improving operating conditions despite its decline from the previous month.

Al-Ghaith explained that faster output growth reflected Saudi businesses’ ability to respond to domestic demand through operational efficiency, marketing initiatives and increased sales activity.

New orders maintained strong growth, although demand had become more selective, he added.

Continued hiring, inventory accumulation and purchasing activity reflected companies’ readiness to meet demand, while expectations for output over the coming year remained only mildly positive and below the survey’s historical average.