A growing security premium threatens Saudi Arabia’s investment project 

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

Saudi special report: we assess the outlook for the kingdom’s economy  

Abu Dhabi teams up with OpenAI and Microsoft to train government employees  

SoftBank in talks for $100 billion Gulf investment for new AI fund 

And, the three things we enjoyed reading  

The attack on the headquarters of Saudi Arabia’s state-owned oil company Aramco on Tuesday evening as part of a suspected Houthi missile strike marks the latest blow to the kingdom’s image as a safe and viable place to do business.  

While there was no official comment from Aramco, the kingdom’s energy ministry confirmed the strike had caused a limited fire but no injuries or fatalities, though it was unclear whether the building in the eastern city of Dhahran had been hit directly by a missile or by falling debris.

Authorities also reported drones and missiles were intercepted and destroyed near the capital, Riyadh, and the country’s southern region.  

On Wednesday, the Houthis ​vowed to press on with attacks on Saudi airports and oil facilities.

As the kingdom’s conflict with the Iran-backed Houthis intensifies, questions are mounting over whether its much-vaunted Vision 2030 is increasingly out of reach. 

For a country whose future hinges on diversifying away from oil and attracting foreign investment to help it do so, the spillover effects of the conflict pose a significant setback to its ambitions. 

“The events of recent weeks are serious,” Saudi Energy Minister Prince Abdul Aziz bin Salman told the World Petroleum Energy Congress in Riyadh on Monday. “Our response must be equally serious while remaining focused on the decades ahead; Vision 2030 must continue, investment must continue.” 

Exactly what a “serious response” entails remains unclear, but what is immediately apparent is that investor sentiment has already been rattled.  

The CEOs of Shell, TotalEnergies, BP, and ExxonMobil had all been due to attend this week’s WPEC but are conspicuous by their absence.  

I was due to travel to Jeddah this week for interviews and an event, but, like many others, plans were canceled given the security situation. 

According to the Wall Street Journal, the Saudi crown prince, Mohammed bin Salman, has been moved between heavily guarded palaces fitted with bunkers by a handpicked security team.  

During the course of the last week, many of the kingdom’s most strategic assets have become high-profile targets. Most notably, King Khalid International Airport in Riyadh suffered four attacks in the space of five days. The Saturday attack marked the deadliest attack on Saudi soil in more than a decade, killing 13 people and injuring 309.  

James Reeve, a Saudi macro consultant who formerly worked as a senior director for the kingdom’s Public Investment Fund, told me that foreign investments already made in Saudi are unlikely to be reversed in the near term.

“I think more troubling for the Vision 2030 story is the impact on new FDI (foreign direct investment) inflows,” said Reeve.  

“For foreign firms weighing up significant capital investments in the kingdom, the images of missiles falling apparently unhindered on the capital’s airport will be shocking and difficult to forget. Those contemplating investments in tourist infrastructure will also have to weigh the impact on tourism inflows.” 

On Monday, Saudi authorities extended the airport’s closure until Saturday, and........

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