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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 holds gains amid ceasefire hopes and Venezuela tensions. Oil prices held modest gains as markets balanced cautious optimism over possible Ukraine ceasefire talks against heightened tensions between the US and Venezuela that added a risk premium to prices. Brent traded below USD63/b and WTI near USD59/b after edging higher, with President Trump describing discussions with Russia’s leadership as encouraging but uncertain. Meanwhile, US said it would begin military action against Venezuelan drug cartels, adding geopolitical risk that tempered concerns over swelling global supply, as OPEC+ and other producers ramp output and the IEA forecasts a record surplus next year. Demand also remains soft, particularly in China, where buying is seen subdued until at least mid-2026. Adding to the bearish fundamentals, US government data showed crude inventories rose by 574,000 barrels last week.
Silver near record as rate-cut bets fuel rally. Silver hovered near an all-time high around USD58/55/oz after weak US payroll data reinforced expectations of a Fed interest rate cut at its final meeting of the year. Silver has climbed for eight consecutive sessions, supported by speculation over tight physical supply and the near-uncertain outlook for lower borrowing costs, which boosts non-yielding assets. November’s sharp payroll decline added to concerns of labour market cooling, pushing traders to price in a 25bps cut in December. Silver has roughly doubled this year, driven by an October supply squeeze that tightened inventories globally, including decade-low stockpiles in China. Prices have also been lifted by heavy inflows into ETFs and options trading, notably from retail investors, against the backdrop of a potential US tariff on silver after it was added to the critical minerals list. A slightly weaker dollar further supported precious metals demand.
MIDDLE EAST - CREDIT TRADING
End of day comment – 03 December 2025. Another mixed day at best. The market is becoming more and more technical and hence we see a more distinctive divergence in performance. For sale today was QATAR long end, haven't seen QATAR underperforming for a while, but 48s/49s/50s were sitting lose and bonds closing -0.25pt/+3bp. For sale were also corporate bonds, mainly ALDAR and DPWDU with very little appetite from the street to put bids behind it. DPWDU 35s closed -0.25pt/+5bp, ALDAR 35s -0.25pt/+5bp. Making the case for how much technicals rule, ALDAR 55s hybrid has still shorts and closed unch/+1bp. Higher beta names remained bid led by OMAN belly bonds 31s today closed +0.25pt/-2bp, also seen buyers in MOROC with 33s closing +0.5pt/-3bp. The rest of the market was pretty sticky in cash price and spreads just moved wider with the UST rally in the morning and tighter when UST came off in the afternoon with very little activity and dod change. Primary markets also seem to have wrapped up in the universe I cover, the next catalyst will be PCE and FOMC on the macro side.
MIDDLE EAST - MACRO / MARKETS
Egypt’s private sector recovery and improving external balances. Egypt’s economic momentum strengthened toward year-end as both domestic activity and external balances moved in a more favourable direction. PMI climbed to 51.1 from 49.2 in November, marking the strongest expansion in more than five years and returning the index above the 50 threshold for the first time since February, driven by broad-based growth in output and new orders across manufacturing, construction, and services, while cost pressures eased thanks to lower import prices and a firmer Egyptian pound. The rebound in demand suggests that earlier macro stabilisation measures are beginning to translate into real economy activity. In parallel, Egypt’s external position improved, with the current account deficit narrowing to around USD15.4bn in FY2024/25, down from about USD20.8bn in the previous fiscal year, reflecting stronger tourism revenues, increased services exports, and improved capital needs. Taken together, these trends point to a gradual economic normalisation, where recovering private-sector momentum and a more manageable external position reinforce near-term growth prospects, even as structural challenges remain.
Turkey expands US energy ties and accelerates LNG-led diversification. Turkey is exploring investments in US oil and gas upstream assets, holding talks with major companies as part of a broader strategy to deepen its energy partnership with the US and move beyond its current reliance on US-sourced LNG. Turkey has already signed 150bcm of long-term LNG contracts since late 2024, with deliveries starting mainly between 2027 and 2030, and LNG imports rising to 5.2 million tons this year from 3.98 million tons in all of 2024. With around 1,500 LNG cargoes expected over the next 10-15 years, Turkey plans to expand its regasification fleet to five FSRUs, deploy seasonal capacity to Egypt, and potentially double gas transit capacity to Bulgaria to 7-10bcm, strengthening its ambitions to become a regional gas trading hub while diversifying away from Russian and Iranian pipeline supplies.
