Overview:
Saudi Arabia's economy showed mixed strength this week, with construction activity reaching its second-highest purchasing managers' index reading of 2026 at 53.1 points, signaling sustained private sector expansion. Simultaneously, global oil markets tightened as Brent crude surged above USD 93 per barrel on geopolitical tensions, while domestic inflation moderated with 58 commodities and services declining in price during July. Government bond issuance and non-oil export growth provided additional economic support.
Details:
The Rajhi Financial Company's purchasing managers' index for Saudi construction rose to 53.1 points, confirming the private construction sector's resilience and marking the second-strongest performance recorded in 2026. This expansion reflects ongoing domestic infrastructure projects and private investment activity despite global economic headwinds.
Oil markets rallied sharply as Brent crude climbed to USD 93.65 per barrel, gaining more than 2 percent on escalating geopolitical tensions between the United States and Iran. The five-day rally pushed crude toward its highest monthly levels, with traders expressing concerns about potential supply disruptions. Gold prices similarly strengthened, rising 2.9 percent to USD 4,460 per ounce, reflecting broader risk-off market sentiment and declining US Treasury yields following the Federal Reserve's announcement of expanded long-term bond repurchase operations.
Domestically, the Central Debt Management Authority closed its August sukuk (Islamic bond) issuance at 9.518 billion Saudi riyals, maintaining investor appetite for government debt. The General Authority for Statistics reported that 107 goods and services increased in price during July, while 58 items declined, indicating moderate inflationary pressures. Non-oil exports grew 8.4 percent year-on-year in the second quarter of 2026, demonstrating economic diversification gains.
Outlook:
Investors are monitoring whether Brent crude can sustain momentum toward USD 100 per barrel if US-Iran tensions escalate further, with implications for regional economic growth and global markets. The sustained pace of construction sector expansion suggests continued private investment confidence, though global commodity volatility and US monetary policy shifts remain key variables for Saudi market performance in coming months.