Moody's, the credit rating agency, said that Saudi Arabia's expected financial recovery in 2027 supports its expectations of continuing to make prudent decisions regarding spending and borrowing, noting that rearranging government investments helps the Kingdom maintain financial space, while continuing to implement economic diversification plans.
The agency added, in a comment on the preliminary statement of the Saudi budget for the year 2027, that the prolonged trade disturbances and additional spending limited the financial improvement that it had previously expected, but it saw that the trend towards controlling spending in the coming year supports the Kingdom’s financial path.
Saudi Arabia expects total spending in 2027 to reach about 1.392 trillion riyals ($371.2 billion), compared to revenues estimated at about 1.202 trillion riyals ($320.5 billion), resulting in a deficit of about 190 billion riyals ($50.7 billion), or 3.6 percent of the gross domestic product.
Moody's believes that rearranging government investment priorities allows continued spending on economic diversification projects, while at the same time reducing pressures on public finances. This is in line with the government’s tendency to continue implementing priority projects with economic and social returns, while maintaining the sustainability of public finances.
On the oil side, the agency said that it expects disruptions in strategic maritime shipping routes to continue until mid-2027, which may affect oil production. However, it indicated that the rise in crude prices helped mitigate the impact of the decline in production and exports during the recent period.
These expectations come at a time when the Ministry of Finance estimates indicate a contraction in real GDP by 3.6 percent in 2026, affected by a decline in oil activities by about 21.8 percent, while non-oil activities are expected to grow by 3.2 percent. The growth of non-oil activities reached 1.8 percent during the first half of the year, bringing their contribution to the output to 57.3 percent.
Moody's comment reflects a fiduciary reading of the preliminary statement that focuses on Saudi Arabia's ability to recalibrate the pace of spending and investment instead of retreating from the diversification agenda, which helps maintain financial flexibility in light of a geopolitical and commercial environment that remains highly volatile.
The S&P 500 and Nasdaq indexes touched new record levels at the beginning of trading on Tuesday, supported by a decline in US Treasury bond yields and oil prices, while investors await the start of the third-quarter corporate results season next week.
The Dow Jones Industrial Average rose 0.48 percent to 51,511.59 points, the S&P 500 rose 0.56 percent to 7,817.12 points, while the Nasdaq Composite advanced 0.63 percent to 27,650.92 points, at 9:47 a.m. New York time.
The rise in stocks came at a time when Treasury bond yields declined from their high levels, as the 30-year bond yield stabilized at 5.66 percent, while the benchmark 10-year bond yield fell 2.1 basis points to 5.28 percent.
The US jobs report, which came weaker than expected last week, helped calm investors' expectations about interest rates during the current year. According to the CME Group's Fed Watch tool, traders currently see a 78 percent probability that the Federal Reserve will keep interest rates unchanged this month, while markets are still largely pricing in the possibility of a hike in December.
At least four Fed officials are scheduled to speak on Tuesday, including New York Federal Reserve Chairman John Williams, which may provide new indications about the course of monetary policy.
In the stock market, most of the shares of the “big seven” companies rose, with “Meta,” “Tesla,” and “Amazon” rising, while “Apple” and “Alphabet” declined by about 0.2 percent each. Nvidia's stock also rose 1.2 percent, bringing the company's market value close to the level of $6 trillion.
Robert Pavlik, investment portfolio manager at Dakota Wealth, said that the information technology sector appears to be the most attractive to investors, noting that rising energy prices may, in turn, put pressure on consumer spending.
In the energy sector, oil prices fell by more than 2 percent, as supply concerns eased due to continued crude exports from the Middle East and the Group of Seven countries announced measures to release emergency stocks. The S&P 500 energy sector index fell by 0.6 percent.
Investors are awaiting the start of the third-quarter corporate results season next week, amid expectations that the profits of S&P 500 companies will rise by more than 30 percent on an annual basis, according to LSEG data, driven largely by companies related to artificial intelligence.
Constellation Energy shares jumped 12.9 percent, to be the biggest gainer on the S&P 500, after Google entered into an agreement to purchase 3,590 megawatts of electricity from the company.
AMD shares also rose about 1 percent after CEO Lisa Su said that the company intends to significantly increase chip supplies in 2027 to keep pace with the growing demand for artificial intelligence applications.
Option Care Health shares jumped 32.9 percent after McKesson and private equity firm Clayton Doubleier & Rice agreed to acquire the infusion therapy services provider in a deal worth about $5.8 billion, including debt.
The number of winning stocks versus losing stocks was 1.91 to 1 on the New York Stock Exchange and 1.64 to 1 on the Nasdaq. The S&P 500 recorded 18 stocks at their highest levels in 52 weeks, compared to one stock at the lowest level, while the Nasdaq recorded 39 stocks at new highs and 63 stocks at new lows.
Traders said that independent Chinese refiners have increased their purchases of crude oil from Iraq and Qatar for delivery in October and November to compensate for shrinking Iranian supplies, at a time when exports from other producing countries in the region through the Strait of Hormuz are recovering.
Strong demand from private refiners for non-sanctioned Gulf crude helped support the market after supply disruptions linked to the US-Israeli war on Iran.
Three informed traders said, according to Reuters, that Chinese refineries purchased at least 12 million barrels of Iraqi and Qatari crude oil from Mercuria, Tutsa, and Trafigura companies. One of them estimated total purchases at between 15 million and 20 million barrels.
Traders added that the shipments were sold at prices higher than the Brent standard on the Intercontinental Exchange by between $12 and $20 per barrel, and on a delivery basis.
The majority of purchases were from Iraqi Basra Medium and Heavy crude oil, which are among the cheapest types of oil available in the Middle East.
The sources said that Hongrun Petrochemical, Zhicheng Petrochemical, Hualong, and Chambroad Petrochemical are among the buyers.
One trader said that Iraqi oil has become the new standard for independent Chinese refiners. Because of its availability and speed of delivery.
The sources, who spoke on the condition that their names not be published because they were not authorized to speak to the media, stated that the Hongrun and Shenqi petrochemical companies purchased 3 million barrels of Qatari Al-Shaheen crude to arrive in early November, according to Reuters.
These deals came after purchases of more than 20 million barrels of crude oil from West Africa, Canada and Colombia between late August and early September, as Iranian supplies dwindled after the naval blockade imposed by the United States on Iranian ships in July.
Data from Kpler Analytics showed that China's imports of Iranian oil fell by about half in September from a year ago, reaching 590,000 barrels per day, the lowest level since January 2023.
Kpler said that the amount of Iranian crude oil stored on tankers outside the blockade zone decreased by more than half, from 100 million barrels in late July to 45 million barrels.
The company's data showed that Iran did not export any quantities of crude oil during September, for the first time since Kpler began tracking oil flows from the country in 2013.
One trader said that trading companies reduced price offers with the recovery of exports through the Strait of Hormuz to stimulate demand from independent Chinese refiners, adding that buyers were not willing to pay immediate premiums of more than $20 per barrel.
