With the US and Iran edging toward a peace deal, the potential reopening of the Strait of Hormuz and a partial rollback of sanctions are already rippling through expectations for oil supply, regional risk and capital flows. Oil prices have swung sharply, and investors are reassessing which emerging market stocks could benefit if tensions ease and trade routes normalize. This article highlights 3 stocks from an Emerging Markets Equities screener that appear positively exposed to this news. It aims to help you quickly identify where the risks and potential opportunities might sit as the picture in the Middle East continues to evolve.

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Saudi Basic Industries (SASE:2010)

Overview: Saudi Basic Industries is a Riyadh based chemicals and materials producer that makes and sells a wide range of petrochemicals, plastics and agri nutrient fertilizers used in everything from packaging and consumer goods to construction and agriculture worldwide.

Operations: The company generates most of its revenue from Petrochemicals at about SAR 100.98b, with a smaller contribution from Agri nutrients at about SAR 12.22b, and sells across Saudi Arabia, the rest of Asia, China, the Americas, Europe and Africa.

Market Cap: SAR 165.9b

Saudi Basic Industries sits at the heart of Saudi Arabia’s chemicals sector at a time when a potential US Iran peace deal and a reopening of the Strait of Hormuz could ease regional risk and support trade flows that matter for its global footprint. The company is focusing on cost and portfolio restructuring that targets a SAR 3b uplift to EBITDA by 2030. Analysts currently anticipate a shift from losses to profitability over the next few years, with revenue growth forecast ahead of the local market. Reliance on external borrowings, pressure from global overcapacity and weak profitability outside Saudi Arabia, however, indicate that the path to higher quality earnings may be challenging. This backdrop is one reason many investors are paying close attention to the company’s next phase.

Saudi Basic Industries’ push for a SAR 3b EBITDA uplift could be masking a far more interesting earnings reset story, and the 1 key reward and 1 important major warning sign may reveal where that path could unexpectedly bend.

Burgan Bank K.P.S.C (KWSE:BURG)

Overview: Burgan Bank K.P.S.C is a Kuwait City based bank that offers everyday accounts, deposits, loans, cards and wealth management for retail clients, alongside corporate lending, trade finance, treasury and investment banking services across Kuwait and selected international markets.

Operations: The bank generates most of its operating income from International Operations at about KWD 169.3m and Kuwait Corporate and Consumer Banking at about KWD 98.2m, with a smaller contribution from Kuwait Treasury, Financial Institutions and Investment Banking at about KWD 19.7m, partly offset by central office and segment adjustments.

Market Cap: KWD 744.8m

Burgan Bank sits at the crossroads of Kuwaiti and wider MENA capital flows. A US Iran peace deal and reopening of the Strait of Hormuz could support cross border lending, trade finance and fee income at the same time that management is working through the UGB integration and a costly core banking upgrade. Analysts expect revenue and earnings growth, yet recent results show pressure on net interest income, margin and bad loans, and the P/E is above many peers. For investors, the key question is whether digital investments, ESG efforts and improved asset quality can translate into durable returns before credit risks and integration costs weigh more heavily on performance.

Growth at Burgan Bank looks like it could be decoupling from recent pressure on margins and bad loans, so it pays to see how that story lines up with the analyst forecasts for Burgan Bank K.P.S.C and what the P/E might really be signaling.

Egypt Aluminum (CASE:EGAL)

Overview: Egypt Aluminum is an integrated producer of aluminum products in Egypt, making everything from basic ingots and billets to rolled coils, sheets and plates, as well as specialized extruded profiles for construction and industrial customers, and operates as a subsidiary of Metallurgical Industries Co.

Operations: The company generates all of its EGP 45,884.46m in revenue from its Metals & Mining, Aluminum segment.

Market Cap: EGP 126.86b

Egypt Aluminum provides direct exposure to Egypt’s industrial base at a time when a US Iran peace deal and a potential easing in regional tensions could support investment flows and energy costs that matter for power hungry smelters. The stock combines its current reported ROE of 35% and forecast earnings growth of 20.8% a year with concerns around margin compression, volatile profits and reliance on higher risk external borrowing. In addition, there is an upcoming extraordinary shareholders meeting and a P/E that sits below wider metals and mining averages but above some peers. This creates a situation where expectations, funding risk and earnings quality are all in focus, rather than a simple “cheap or expensive” story.

Egypt Aluminum’s 35% ROE and 20.8% forecast earnings growth could be masking a very different risk reward profile, and the 2 key rewards and 3 important warning signs (1 is major!) might reveal the twist investors are missing

The three stocks in this article are just a starting point, and the full Emerging Markets Equities screener surfaces 24 more companies with equally compelling emerging markets stories tied to trade routes, capital flows and sector specific catalysts. Use Simply Wall St to identify, compare and analyze the precise catalysts and narratives that matter most to you so you can focus on the opportunities you find most compelling across this theme.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.