Reuters Gulf Currents Newsletter - Wheat Woes Hit Fertile Crescent

Dec 18 (Reuters) - Andrew Mills

Deputy Bureau Chief, Gulf

This week's Gulf Currents spans geopolitics, grain, and glitter.

Saudi Arabia's Midad Energy is circling Lukoil's global assets, while Yemen’s fragile calm fractures under southern separatist gains. China presses the Gulf to seal a long-stalled trade pact and Qatar bets cheap power will fuel its AI leap. Plus, Riyadh's Soundstorm festival turned the desert neon and Cardi B into "Halal B".

We also explore how climate shocks and politics are gutting wheat harvests in the Fertile Crescent.

Gulf Currents is taking a festive breather for the next two weeks. We'll be back in January to judge whether this year's Dubai New Year's Eve fireworks were simply spectacular or visible from space.

News briefing

- Saudi Arabia's Midad Energy has emerged as a leading contender to buy the international assets of Russia’s second-largest oil producer Lukoil, leveraging deep political ties with Moscow and Washington. The all-cash bid comes amid U.S. sanctions on Russian oil majors, with funds held in escrow until restrictions lift, sources told Reuters.

-Southern separatists' takeover of much of Southern Yemen has shattered a fragile lull, with at least 32 troops killed and raising fears of renewed civil war. The UAE-backed STC now claims control across the south, prompting a Saudi-Emirati delegation to the port city of Aden and U.N. chief Guterres to urge restraint and dialogue.

- China urged the Gulf Cooperation Council to finalize a free trade deal after two decades of talks, calling conditions “ripe” amid rising protectionism. On a Riyadh stop, Foreign Minister Wang Yi pushed energy and investment ties with Saudi Arabia and pledged closer coordination on regional diplomacy and security.

Twin Wheat Crises: Climate and Politics Upend Fertile Crescent

Syria and Iraq, once breadbaskets of the Middle East, are now case studies in how climate stress and geopolitics collide. Both are facing their worst wheat seasons in decades - Syria after its harshest drought since 1989 and Iraq amid record-low flows on the Tigris and Euphrates. Even Iran’s yields have fallen drastically.

For Iraq, three years of self-sufficiency have evaporated as water reserves plunge and planting is slashed.

“Iraq was having a wheat boom. Things have now flipped and it’s facing its driest season in modern history because of record low water levels flowing in the Tigris and Euphrates,” said Sarah El Safty, Reuters Middle East commodities correspondent.

Farmers are abandoning fields, and rural displacement is rising. Baghdad’s costly push for desert farming and modern irrigation is colliding with groundwater depletion and high costs.

“Iraq is downstream from cross border dams in Turkey and Iran and they’ve become vulnerable to outsiders again,” El Safty said.

Syria’s picture is even more stark: output down about 40%, bread subsidies under strain, and imports set to surge more than 50%. The new government is struggling to secure enough major wheat deals, hampered by financing gaps. Aid trickles in, but not enough to offset the shortfall.

Both crises underscore a bigger truth: climate shocks and upstream water grabs are now economic and security risks. Global wheat oversupply offers temporary relief, but dependence on imports leaves countries exposed to price swings and political leverage.

“What's needed the most is regional cooperation to ensure the future of agriculture and food production in these countries,” El Safty said.

Chart of the week: Qatar Bets on Cheap Power to Join Gulf AI Race

Qatar is leaning on its abundant, low-cost energy to muscle into the Gulf’s AI boom, hoping cheap electricity and deep pockets will help it catch up with Saudi Arabia and the UAE. Backed by its $526 billion sovereign wealth fund, Qatar launched a new company Qai, its boldest move yet to lure hyperscalers—cloud giants like Google and Microsoft—hungry for power-intensive AI infrastructure.

Analysts say energy is Qatar's ace in a region where cooling costs soar. Stephen Beard of Knight Frank estimates the country could hit 1.5–2 GW of data center capacity by 2030 if it sustains cheap power, while rivals aim for 5–6 GW.

But low-cost electricity won't erase hurdles: scarce chips, Western-style data governance, and talent shortages.

The AI-driven demand for computing is so massive that any new build-out in Qatar is welcome news for U.S. cloud computing companies, said MEI's Mohammed Soliman.

The Last Wave: Salamalaykumsalaykumsalayam!
Saudi Arabia's flagship electronic music festival, Soundstorm, turned a bleak stretch of desert on Riyadh's outskirts into a neon-flooded carnival last weekend, drawing huge crowds with thumping beats and blazing illuminations.

This year brought a uniquely Saudi innovation: “Her Zones,” women-only spaces introduced after harassment complaints at previous editions. “The closer you got to the front, the more it just became only men—pressed against men, jumping around—while women hovered at the back. The ‘Her Zones’ were clearly a response to that,” said Timour Azhari, Reuters Chief Saudi Correspondent.

Then came the headliner: Bronx-born rap superstar Cardi B. Ahead of her set, she posted a video in a cropped “semi-abaya” and dubbed herself Halal B.

Mid-performance, she riffed an approximation of Arabic: “Salamalaykumsalaykumsalayam… Let’s keep this party going!” Bronx-inflected “Mashallahs” sealed the spectacle.

“I don't think the word Mashallah is ever going to be the same for me again,” Azhari said.

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