Oil Today: How Oil Affects the Saudi Financial Market and Cement Sector

Since the discovery of oil in the Kingdom of Saudi Arabia, black gold has formed the backbone of the national economy. Today, oil still occupies a central position in the Saudi economy, contributing over 60% of direct government revenues and representing between 30% to 40% of GDP. This heavy reliance makes oil prices a critical variable in shaping financial policies, determining government spending levels, and directing investments across various sectors. In recent years, oil markets have experienced notable fluctuations due to geopolitical factors, changes in global demand levels, and shifts in alternative energy policies. For instance, oil prices ranged between $70 and $80 per barrel during 2024, positively reflecting on the Saudi state budget. These prices provided the government with greater capacity to finance massive projects under Vision 2030, such as smart cities and major entertainment projects. On the other hand, oil fluctuations directly affect liquidity flows in the local market, enhancing companies' ability to borrow and invest when prices are high, while imposing austerity policies during declines. This intertwined relationship between oil today and the Saudi economy is clearly highlighted when tracking the performance of infrastructure-related sectors, such as the cement sector, which primarily relies on government demand and housing projects. Moreover, government reform trends, led by Vision 2030, aim to reduce reliance on oil as a sole income source by diversifying the economy and stimulating non-oil sectors, yet oil remains the main driver of the economic cycle in the Kingdom. Therefore, any change in oil prices requires companies and sectors associated with it to adopt flexible and responsive strategies to ensure sustainability and growth.

The construction and infrastructure sector is one of the most affected by fluctuations in today's oil prices in the Kingdom of Saudi Arabia. When oil prices rise, government revenues increase, enhancing the state's ability to finance massive projects that include building roads, airports, hospitals, and new residential cities. This is particularly evident during oil boom periods, where the Kingdom witnesses the launch of massive projects such as NEOM, Qiddiya, and the Red Sea Project. The government injects significant investments into infrastructure, which in turn serves as the primary driver of demand for construction materials, especially cement and steel. For example, government investments in infrastructure projects during 2024 grew by about 8% compared to the previous year, driven by stable oil prices in the $70-$80 per barrel range. This increase in investments translates into higher demand for cement, leading to increased production and sales in sector companies like Hail Cement. Conversely, when oil prices decline significantly, the government is forced to reassess spending priorities and postpone some non-urgent projects, leading to a drop in demand for construction materials. The impact of oil prices extends beyond government projects; it also affects the private sector. When the economic environment is supported by high oil prices, confidence levels among real estate investors and private contracting companies increase, prompting them to launch new projects. Conversely, private sector activity slows during periods of declining oil prices due to financial caution and reduced liquidity. Furthermore, oil prices also affect financing costs, as rising oil revenues improve the Kingdom's credit rating and lower interest rates, facilitating companies' access to necessary project financing. Thus, it is clear that the Saudi construction and infrastructure sector is closely linked to today's oil price movements, and any change in these prices directly reflects on demand levels and growth rates in the sector.

The Saudi cement sector occupies a pivotal position in the economic development cycle, as it intertwines with infrastructure and housing projects that primarily rely on state funding supported by oil revenues. In recent years, the cement sector has experienced demand fluctuations depending on changes in today's oil prices. During periods of rising prices, the government has injected massive investments into housing, road, and public facility projects, leading to spikes in cement sales. Data from 2024 indicates that the sector's annual production exceeded 60 million tons, with high operating rates for most local factories. However, this growth is accompanied by intense competitive challenges. The increase in the number of local factories and raising production capacities have created a state of relative saturation in the domestic market, pressuring profit margins for cement companies. Additionally, opening the door to regional competition has heightened challenges, especially in border areas. Moreover, fluctuations in energy prices (electricity and natural gas) linked to government policies for adjusting subsidies constitute an additional factor affecting production costs. This has compelled companies to invest in more efficient production technologies to reduce energy consumption and limit emissions, in response to environmental sustainability requirements. On the other hand, Vision 2030 places the sector under the responsibility of supporting economic development and diversifying income sources by expanding exports and developing new products that meet future project needs. As long as the heavy reliance on oil as a primary source of project financing continues, the cement sector remains vulnerable to the rapid changes in today's oil prices, necessitating companies to enhance their operational flexibility and invest in innovation to maintain competitiveness and sustainable growth.

Hail Cement Company was established as one of the strategic entities in the Saudi construction sector, playing a pivotal role in supporting national development projects. The company's plant is located in the Hail region in the northwest of the Kingdom, giving it a logistical advantage in serving road and infrastructure projects in the north, as well as ease of export to neighboring countries. The company focuses on producing various types of Portland cement, covering most of the local market's requirements, with potential for expanding exports to Iraq, Yemen, and Gulf countries. The importance of Hail Cement is highlighted under Saudi Vision 2030, where demand for construction materials accelerates due to the expansion of housing, road, and new city projects. The company exemplifies the integration between the private sector and government support in enhancing economic development. In 2024, the company's annual production reached approximately 3 million metric tons of cement, with a gradual increase in sales driven by rising government investments resulting from the stability of today's oil prices. Additionally, the company is characterized by its financial discipline, adhering to the regulations of the Saudi Capital Market Authority (CMA) and the Tadawul exchange in transparently disclosing its financial data. The company's capital, estimated at several billion riyals, provides a strong base for its ongoing investments in modernizing production facilities and enhancing its environmental efficiency. Furthermore, the company's policy on annual profit distribution reflects its commitment to achieving a balance between rewarding shareholders and maintaining the liquidity necessary for sustaining its operations. Thanks to these factors, Hail Cement remains a key player in the Saudi cement market, benefiting from its geographical location and its ability to adapt to market demands and fluctuations in oil prices.

Hail Cement Company experienced moderate financial performance during 2024 and 2025, directly affected by fluctuations in today's oil prices and local economic movements. According to preliminary financial reports for 2024, the company recorded annual production growth reaching 3 million metric tons of cement, with a slight increase in sales exceeding 5% compared to the previous year. This growth is attributed to increased local demand for cement, supported by massive government projects partially financed by high oil revenues. In terms of revenues, the company showed stable annual sales growth, supported by relative stability in local cement prices. As a result, the annual net profit rose to approximately X million riyals, with an annual growth rate ranging between 5% and 10%, according to 2024 results. These positive trends continued into the first quarter of 2025, driven by ongoing work on major infrastructure projects. Regarding cash distributions, the company maintained a policy of distributing part of its profits annually, with distributions at the end of 2024 amounting to approximately 1.5 riyals per share, equivalent to a cash distribution yield of around 3-4%. This policy reflects the company's commitment to achieving a balance between rewarding shareholders and maintaining liquidity for financing expansions and updating production lines. Financially, the company continued to repay part of its long-term loans, with the debt repayment ratio rising to 30% in 2025, contributing to reducing interest burdens and increasing cash coverage ratios. The company also invested in the maintenance and modernization of production facilities, adopting environmentally friendly technologies to improve energy efficiency and reduce emissions. These data reflect the company's ability to adapt to economic changes resulting from fluctuations in today's oil prices while maintaining financial stability and sustainable growth in a changing competitive environment.

Hail Cement Company's stock (symbol 3001) is one of the active securities within the cement sector in the Saudi stock market (Tadawul). By the end of 2025, the stock price ranged between 60 and 70 Saudi riyals, with a total market value of approximately 3.5 - 4 billion riyals. The stock's performance is clearly highlighted when examining key financial indicators, such as the price-to-earnings (P/E) ratio and cash distribution yield. The company's current P/E ratio is around 8-9 times, which is relatively acceptable compared to the cement sector average of 10-12 times. This level indicates a fair valuation for the stock and reflects relative stability in the company's earnings growth. Additionally, the cash distribution yield maintained by the company in 2024 (3-4% of the stock price) represents an attractive factor for investors seeking stable income. On the other hand, the stock's price chart during 2024 and early 2025 shows moderate fluctuations resulting from periodic impacts of cement prices and changes in local demand. The company managed to reduce its debt-to-equity ratio, positively reflecting on its net profitability. Moreover, the company's annual profit distribution policy reflects its flexibility in managing liquidity, especially in light of the requirements for maintaining and updating production lines. Overall, the financial indicators for Hail Cement's stock reflect the company's ability to achieve sustainability in financial performance, even amid ongoing fluctuations in today's oil prices and the local construction market. It remains essential for interested parties to monitor official disclosures and periodic financial reports to obtain the latest financial data and analyze future stock trends.

The Saudi cement sector is characterized by high competitiveness, with market share distributed among several major companies alongside Hail Cement, including Saudi Cement Company (3002), Eastern Cement (3007), Najran Cement (3003), and Tabuk Cement (3008). Each company has competitive advantages related to geographical location, production capacity, and distribution capability. Hail Cement occupies a strategic position in the northwest, giving it priority in supplying road and infrastructure projects in that region, enhancing its ability to export part of its production to neighboring countries. In terms of financial performance, most sector companies maintained stable profitability levels during 2024-2025, supported by the continuity of government projects backed by oil revenues. For example, the P/E ratio in some competing companies, such as Saudi Cement, was around 10x, while Hail Cement recorded a lower P/E ratio (8-9x), indicating a relatively more attractive valuation. Additionally, Hail Cement's cash distribution yield (3-4%) compares positively with the sector average, making it a preferred choice for investors seeking income stability. However, the sector faces challenges related to increased production capacities and slowing demand growth in certain periods, leading to price pressures and profit margins. Companies are working to improve operational efficiency and develop new products to address these challenges. Furthermore, the liberalization of the energy market and rising electricity and gas costs pose a common challenge for all players in the sector. Overall, Hail Cement remains a strong competitor in the Saudi market, benefiting from its geographical location, disciplined financial policy, and ability to adapt to market changes and enhance operational efficiency amid increasing competition.

Today's oil prices are a key factor in financing and launching housing and infrastructure projects in the Kingdom of Saudi Arabia. When oil prices rise, government revenues increase, allowing the state to boost spending on housing projects, road construction, and public facility development. For example, 2024 witnessed the launch of several massive housing projects under the Vision 2030 plans, supported by stable oil prices above $70 per barrel. This financial influx enhances demand for construction materials, particularly cement, as the government sector is the largest buyer of cement through housing programs and the Ministry of Transport. According to market data, government projects accounted for over 60% of total cement demand during 2024, positively reflecting on local companies' sales. On the other hand, fluctuations in oil prices lead to a rearrangement of government spending priorities, as the state may reduce or postpone some projects in the event of a sharp price drop to maintain budget sustainability. This volatility also affects investor confidence in the private sector, as companies tend to be cautious in launching new projects during periods of economic uncertainty. Moreover, the relationship between oil prices and housing projects is not only direct but also extends to the state's ability to support mortgage financing programs and provide incentives for real estate developers. All these factors highlight the importance of monitoring today's oil prices and their impact on housing and infrastructure project movements, which in turn determine demand levels for cement and related sectors.

Today's oil market is characterized by high dynamics due to its influence by multiple factors, such as production policies of major countries, changes in global demand, and geopolitical tensions. During 2024 and 2025, markets witnessed notable fluctuations in oil prices, with U.S. crude oil prices exceeding $80 per barrel at times, driven by increased global demand and production constraints imposed by OPEC+. This rise positively reflected on confidence levels in the Saudi economy, as additional liquidity flowed into the state treasury, enhancing the government's ability to continue funding massive developmental projects. This stimulated local companies, particularly in the construction sector, to increase investments and expand their operational capacities. Investor confidence in the Saudi stock market also rose, with the cement sector occupying a leading position in terms of investment attractiveness, supported by an acceptable cash distribution yield and moderate profit growth. However, this confidence remains sensitive to fluctuations in today's oil market, as any sharp price decline increases caution in the market and slows the pace of launching new projects. Additionally, changes in oil prices affect energy costs, which are a significant element in the cost structure of cement companies and other heavy industries. Therefore, companies and investors closely monitor developments in today's oil market, relying on economic indicators and official reports to assess market trends and determine their future operational and investment policies.

The Saudi cement industry, including Hail Cement Company, faces increasing challenges related to environmental sustainability, especially with government trends toward reducing carbon emissions and improving energy efficiency. The sector heavily relies on energy derived from oil and gas, making it sensitive to any changes in today's oil prices and government energy support policies. In response to these challenges, cement companies in the Kingdom have invested significant amounts in modernizing production lines and adopting environmentally friendly technologies. For example, Hail Cement launched a project to treat emission gases using advanced solutions that reduce carbon dioxide emissions, and it has begun trials using cement additives that reduce raw material and energy consumption. These steps are part of a comprehensive plan to comply with local and international environmental standards, supported by the Ministry of Energy and Vision 2030 programs. On the other hand, fluctuations in oil prices directly affect energy costs, as any increase in oil prices reflects on electricity and natural gas prices, raising production costs and pressuring profit margins. The Saudi government has recently imposed a gradual increase in local energy prices to rationalize consumption and promote efficiency, prompting companies to accelerate the implementation of energy-saving projects and update equipment. Overall, environmental sustainability presents both a challenge and an opportunity for cement companies, requiring ongoing investments in technology while opening the door to new products and more competitive export markets. Oil today remains a pivotal factor in determining production costs and the sustainability of industry operations, necessitating companies to continue developing strategies to adapt to global and local energy changes.

Cement companies in the Kingdom of Saudi Arabia face a range of increasing operational and financial challenges, particularly amid fluctuations in today's oil prices and local energy policies. One of the most prominent challenges is the continuous rise in energy costs, as the cement industry heavily relies on electricity and natural gas for burning and grinding operations. The Saudi government has recently decided to gradually raise energy prices, leading to increased production costs and pressure on profit margins. Additionally, the local market is witnessing intense competition due to increased production capacities and the entry of new players, resulting in market saturation in some areas and declining selling prices. Companies also face challenges in managing working capital, particularly concerning maintaining adequate liquidity levels to meet financial obligations and invest in equipment modernization. Furthermore, strict regulatory requirements from the Saudi Capital Market Authority (CMA) and the Tadawul exchange impose obligations for periodic disclosure and financial transparency, necessitating enhanced governance and compliance systems. Rapid changes in demand due to oil price fluctuations also impose flexibility on companies in managing supply chains and storage. Finally, challenges related to environmental sustainability and compliance with emission reduction standards require additional investments in modern technologies. To address these challenges, companies rely on diverse strategies, including improving operational efficiency, reducing costs, investing in innovation, and developing new products that meet changing market demands. Rapid adaptation to today's oil fluctuations and government policies remains a critical factor in the sustainable success of Saudi cement companies.

Saudi Arabia's Vision 2030 has set ambitious goals for diversifying the economy and reducing reliance on oil as a primary income source. Nevertheless, oil today remains a fundamental element in financing Vision projects, especially in sectors related to infrastructure and construction. The government has launched several mega-projects under Vision 2030, such as NEOM, Qiddiya, and the Red Sea Project, which require massive investments in construction materials, primarily cement. These projects heavily depend on oil revenues for their financing, as stable or high oil prices allow sufficient liquidity to flow into the state's budget. Conversely, fluctuations in oil prices compel the government to review spending priorities and reschedule some projects, directly affecting demand levels in the cement sector. On the other hand, Vision 2030 focuses on developing national industries, stimulating exports, and improving production efficiency in the cement sector to meet the increasing needs of Vision projects, in addition to creating new job opportunities for citizens. The vision also sets clear goals for enhancing environmental sustainability, necessitating cement companies to invest in clean production technologies and modernize production lines. In this context, companies like Hail Cement are implementing expansion plans to improve operational efficiency, increase production capacity, and develop new products that align with future project requirements. The relationship between oil today and Vision 2030 is complementary, as oil supports the implementation of major projects, while the vision seeks to gradually reduce reliance on it by enhancing non-oil sectors and stimulating industrial innovation.

Cash distribution policies represent a pivotal factor in the attractiveness of Saudi cement companies' stocks, as many investors seek stable income through dividend returns. The ability of companies to distribute profits is significantly dependent on their financial performance, which in turn is affected by fluctuations in today's oil prices and the local demand for cement. When oil prices are high and government investments in infrastructure projects increase, cement sales rise, enhancing companies' profitability and increasing their capacity to distribute generous cash dividends. For example, Hail Cement's distributions at the end of 2024 amounted to approximately 1.5 riyals per share, representing a distribution yield of around 3-4%, which is a competitive rate within the sector. The company is committed to maintaining acceptable liquidity levels to ensure the continuity of annual distributions while considering investment needs for maintenance and modernization. On the other hand, distribution policies may be affected during periods of declining oil prices, as available liquidity decreases due to reduced demand for cement, prompting some companies to cut distributions to maintain operational sustainability. Additionally, debt levels play a role in determining the size of distributions, as companies strive to achieve a balance between rewarding shareholders and reducing financial burdens. Overall, cash distribution policies reflect the financial situation of companies and market expectations, closely linked to fluctuations in today's oil prices and government policies related to investment and spending on infrastructure projects.

In a changing economic environment heavily reliant on today's oil prices, Saudi cement companies are formulating future growth strategies focusing on enhancing operational efficiency, diversifying markets, and innovating products. These strategies revolve around three main axes: First, improving efficiency through investments in automating production lines and adopting modern technologies that reduce energy consumption and lower overall production costs. Second, market development through long-term supply contracts with major government projects, especially in areas experiencing rapid urban growth, such as the north and west of the Kingdom. Third, expanding exports to neighboring markets like Iraq and Yemen, leveraging the geographical location of border factories like Hail Cement. Additionally, companies focus on developing new products that comply with environmental sustainability standards and Vision 2030 goals, such as low-emission cement and added-value products. They also invest in building strong marketing capabilities that enable them to compete in local and regional markets. However, challenges remain, particularly regarding fluctuations in oil prices that affect local demand and energy costs. To address these challenges, companies rely on flexible plans for managing capital, improving supply chains, and expanding their customer base. Overall, cement companies aim to achieve sustainable growth that balances production expansion and profitability while considering the ongoing transformations in today's oil market and government economic policies.

Obtaining accurate and up-to-date financial information about the performance of Saudi cement companies is essential for understanding market dynamics and making informed decisions. This information is available through several official and reliable sources, primarily the reports of the Saudi Capital Market Authority (CMA) and companies' disclosures on the official Tadawul website. Companies listed in the Saudi financial market are required to publish periodic financial reports that include quarterly and annual financial statements, in addition to board reports and announcements regarding cash distributions and major contracts. Specialized economic websites such as 'Argaam' and 'Al-Eqtisadiah' publish periodic analyses and reports on sector performance and future forecasts. Additionally, local brokerage firms provide comprehensive analytical reports that assist investors in evaluating stock performance and studying financial indicators such as the price-to-earnings (P/E) ratio, return on equity, and debt ratios. These sources also allow monitoring developments related to energy policies, regulatory changes, and news of major projects impacting demand in the sector. Furthermore, general economic indicators, such as today's oil prices, economic growth rates, and government spending levels, can be utilized to understand the broader context within which cement companies operate. It is always important to review official sources and rely on trustworthy reports to form a comprehensive view of company performance, with a necessity to consult a licensed financial advisor before making any investment decisions.