To read the full report, please download the PDF above.
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 slips as market weighs OPEC+ output pause amid oversupply concerns. Oil prices eased after four consecutive days of gains as traders assessed OPEC+’s decision to pause production hikes in the first quarter of 2026, following a small increase planned for December. Brent hovered near USD65/b and WTI below USD61/b, with the move marking the group’s first pause since it began restoring supplies in April. The market has already fallen 13% this year amid concerns of a growing glut, though industry leaders, including Eni’s CEO argued that the imbalance would be short-lived. Meanwhile, supply risks rose after a Ukraine drone strike disabled a key Rosneft refinery in Russia’s Black Sea region. Going forward, market sentiment will likely hinge on OPEC+’s production discipline, evolving supply disruption, and the trajectory of global demand recovery.
Gold slips as Fed signals caution on further rate cuts and dollar strengthens. Gold prices fell below USD3,985/oz as traders reacted to a more cautious tone from Fed officials and a strengthening US dollar. Fed policymakers Lisa Cook, Mary Daly, and Austan Goolsbee all acknowledged labour market risks but refrained from endorsing another rate cut in December, echoing Chair Powell’s earlier warning for markets not to assume continued easing. The remarks reduced expectations for a December cut to about 67%, down from full pricing two weeks earlier. The dollar index hovering near its strongest level since July, added further pressures on the non-yielding asset. Gold, which hit a record last month before retreating, is struggling to regain momentum as investor weigh Fed policy signals and China’s new VAT restrictions on gold retailers, which could soften domestic demand.
MIDDLE EAST - CREDIT TRADING
End of day comment – 03 November 2025. From the start cash prices adjusted to the left today. In the morning we had some new issue announcements which kept buyers on the fence. In the afternoon we have seen ETFs selling a lot of bonds. On the back of outflows and new issue announcement dealers tried to cut position throughout the day as well. Spreads still behaved as UST continued to weaken and some areas of the market still see short covering and/or yield buyers. In IG names QATAR was 1/2bp wider across the curve today, long end bonds led the weakness with 50s closing -0.625pt/+2bp on the back of a new 2 tranche new issue, 3y and 10y sukuk which will price overnight. The 3y spread is set at T+15bp (1bn) and the 10y sukuk at T+20bp (3bn). In higher beta names MOROC saw selling and weakness in benchmark bonds, 33s closing -0.375pt/+4bp and 50s -0.5pt/+2bp. The belly of OMAN was also for sale and 0.25pt lower on average (+3/4bp), but the technicals in the long end still remained strong with some short covering into selling flows. 51s closing +0.25pt/-5bp. Quasis were mixed but names which outperformed lately like MUBAUH were sold most. The DoD spread move remained in a -2bp/+2bp range though. Today the market suddenly seemed to have turned in terms of flows. One day is probably not enough to come to conclusions, but new issuance remain brisk, not only in GCC. Spreads have tightened a lot since the FED mostly on the UST move, but now it feels the market is readjusting. The overall feel is much weaker than spread moves suggest today.
MIDDLE EAST - MACRO / MARKETS
Turkey’s inflation eases, supporting case for gradual rate cuts. Turkey’s annual inflation slowed to 32.9% y/y in October from 33.3% y/y in September, bolstering the central bank’s resolve to continue easing monetary policy. Monthly price gains were driven mainly by clothing and food, sectors the central bank previously flagged as key inflation risks. Despite the improvement, officials acknowledged that achieving the year-end inflation target of 25-29% remains challenging. Policymakers slowed the pace of rate cuts in October to 100bps from 250bps in September, citing sticky price pressures in food, rent, and education that respond slowly to monetary changes. The latest data provide a modest boost to Governor Faith Karahan’s credibility ahead of his updated inflation outlook due Friday, signalling that Turkey’s disinflation path remains gradual but intact. Looking ahead, the central bank is expected to maintain a measured pace of rate cuts, balancing its easing cycle with the need to anchor inflation expectations and stabilise the lira.
MENAT region showed diverging trends in business activity. Saudi Arabia’s non-oil private sector continued to expand robustly, with the PMI rising to 60.2, up from 57.8 in September. The improvement reflected strong new orders, higher output, and sustained confidence in domestic demand, underscoring the kingdom’s ongoing diversification momentum. In contrast, Turkey’s PMI slipped slightly to 46.5 from 46.7, signalling a deeper contraction amid weak external demand and persistent cost pressures that continued to weigh on factory output. Meanwhile, Egypt’s non-oil private sector sowed tentative signs of stabilisation, as its PMI edged up to 49.2 from 48.8, the modest contraction in three months, supported by slower declines in new orders and employment. Overall, the latest PMI readings highlight Saudi Arabia’s resilience in non-oil growth, Turkey’s continued industrial softness, and Egypt’s gradual recovery amid challenging economic condition.
