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Middle East Daily
SOOJIN KIM
Research Analyst
DIFC Branch – Dubai
T: +44(4)387 5031
E: soojin.kim@ae.mufg.jp
MUFG Bank, Ltd. and MUFG Securities plc
A member of MUFG, a global financial group
Middle East Daily
COMMODITIES / ENERGY
Oil steadies near monthly high as markets eye OPEC+ meeting. Oil prices held steady near recent highs, with Brent around USD69/oz and WTI just under USD66/b, as traders weighed rising geopolitical risks ahead of this weekend’s OPEC+ meeting. Markets are bracing for the possibility of tougher US sanctions on Russia if talks with Ukraine stall, while the US has also doubled tariffs on most Indian imports to pressure India over its purchases of Russian crude. Despite these risks, OPEC+ is widely expected to keep October output unchanged, following months of supply increases that had fuelled surplus concerns. Crude has gained in early September after August’s slump, supported by the threat of further sanctions, ongoing Ukrainian strikes on Russian refineries, and broader supply uncertainties. While the geopolitical backdrop is providing support, weaker refinery runs in Russia could still increase crude availability for export, leaving the market finely balanced.
Gold hits fresh record as Fed cut bets and market turmoil fuel haven demand. Gold climbed to new record high of USD3,546/oz today, extending a six-day rally fuelled by expectations of imminent Fed rate cuts and a flight to safety after equity and bond market selloffs. Prices have risen 5% in less than a week and more than one-third this year, cementing gold’s status as one of 2025’s top-performing commodities. The surge reflects both rate cut bets and heightened safe-haven demand amid concerns over the Fed’s independence, US budget strains, and global trade uncertainty. Meanwhile, silver has outpaced gold’s gains, rising 40% YTD and breaking above USD40/oz for the first time since 2011, underscoring the broader rally in precious metals driven by economic and political instability.
MIDDLE EAST - CREDIT TRADING
End of day comment – 02 September 2025. We were greeted in the morning by new issuance announcements. FABUH announced yesterday and was joined overnight by KSA (5 and 10y), Apicor (5.5y), Arab National Bank (perp) and CBQ (5y). That set the early tone with the weakness in UST and caused morning outflows. The afternoon turned a bit more constructive once 30y UST bounced off 5% and flows became more two way. At EOD buying and selling were well balanced. ETFs are net sellers but RM net buyers. IG closed a touch tighter with QATAR leading the way, 50s was most active in long end closing unch/-2bp. ADGB saw some selling in long end but remains less active than QATAR, 49s closed -0.25pt/+0bp. The higher beta credits had a harder time to recover from the morning selling, especially MOROC had sellers in 33s and 35s EUR both closing -0.375pt/+3bp. OMAN traded steady in the belly but long end was lower on risk off mood , 48s closing -0.375pt/+1bp. The market will turn its attention to primary activity and how deals perform in the secondary. KSA will be the first test, the new 5/10y caused KSA 35s to widen about 5bp today, but overall the market is still steady in the scheme of new supply and global macro markets trading risk off.
MIDDLE EAST - MACRO / MARKETS
Saudi Arabia plans new sukuk sale to fund deficit amid lower oil revenues. Saudi Arabia is preparing to issue new international Sukuk bonds with five- and ten-year maturities to help finance a widening budget deficit caused by weaker oil prices and high spending on its economic diversification agenda. Initial pricing is indicated at around 95bps over US Treasuries for the shorter tranche and 105bps for the longer one, with investor demand already reaching about USD15bn in orders by midday in London. The Kingdom has been ramping up borrowing in recent years to fund Vision 2030 projects such as new cities, EV factories, and tourism ventures, while Brent crude’s 8% decline this year has strained revenues. Saudi Arabia has already raised USD14.5bn in debt so far in 2025, and the IMF expects government debt to rise from under 30% of GDP today to 41% by 2030. The fund also projects the fiscal deficit will widen to 4% this year, compared to Saudi’s own estimate of 2.3%, though it sees the shortfall as manageable given strong reserves.
Libya revives gas project to tackle power shortages and ease regional tensions. Libya’s state-run National Oil Corporation (NOC) has revived plans for a multibillion-dollar natural gas project in the NC-7 block in western Libya, aiming to ease chronic electricity shortages while balancing regional demands for revenue-sharing. With Libya’s gas reserves estimated at 53 trillion cubic feet, NC-7 would be one of the county’s largest projects, seen as critical to meeting both domestic power needs and export commitments. A prior attempt in 2023 stalled after disputes over foreign company profit shares, but the NOC now stresses that bringing new gas supplies online by 2026 is vital to reduce costly fuel imports and stabilise electricity generation. Whether the Tripoli-based government approves the plan remains uncertain, but the renewed push reflects both the urgency of addressing local energy shortages and the delicate balance of Libya’s east-west political economy.
