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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 as Venezuela shock fails to upend oversupplies market. Oil prices swung before stabilising as traders assessed the impact of the US capture of Venezuelan President Maduro on global supply, ultimately concluding the disruption is limited. Brent crude briefly slid 1.2% before recovering around USD61/b, while WTI held above USD57/b, reflecting an already glutted market. Once a major producer, Venezuela now accounts for less than 1% of global output, mostly exported to China, after years of decline. OPEC+ reaffirmed plans to pause supply hikes in Q1 and did not address Venezuela, calling it too early to respond. While US pressure has forced some well shut-ins, key infrastructure remains intact. President Trump said sanctions will stay but hinted US firms want to help rebuild the sector over time, as Secretary of State Marco Rubio signalled oil leverage to drive changes, and acting President Delcy Rodrigues struck more conciliatory tone.
Copper nears record as supply risks and risk-on sentiment collide. Copper prices surged toward a record as tightening supply concerns and a broader risk-on mood lifted base metals, with benchmark prices in London jumped about 3% to just below last week’s peak near USD130,000/t. Fears of potential US import tariffs have prompted traders to accelerate shipments to the US, tightening availability elsewhere, while a strike at Chile’s Mantoverde mind underscored ongoing supply-aide risks amid expanding global demand. The rally was reinforced by strong Asian equities, driven by technology stocks, and by investor reassessment of geopolitical developments following the US seizure of Venezuelan leader Nicolas Maduro. Copper has already surged 42% in 2025 with near-term tightness signalled by backwardation in London even as US exchange-tracked inventories rise on tariff-related stockpiling.
MIDDLE EAST - MACRO / MARKETS
Saudi Arabia maps USD58bn 2026 borrowing strategy. Saudi Arabia has approved a 2026 borrowing plan of roughly USD58bn to finance a projected USD44bn budget deficit and repay nearly USD14bn in maturing debt, underscoring the kingdom’s continued reliance on borrowing as it advances its sweeping economic transformation agenda. The plan, approved by Finance Minister Mohammed Al Jaddan, comes as the world’s largest oil exporter moves into what it describes as the “third phase” of Vision 2030, shifting focus from launching reforms to maximizing their economic impact, including redirecting capital from delayed mega real estate projects toward sectors such as logistics and religious tourism via the Public Investment Fund. According to the National Debt Management Centre, private markets are expected to provide up to 50% of total funding through instruments such as project finance and export credit agencies, while domestic markets will contribute 20-30% and international bond markets 25-30%. International issuance is expected at USD14-20bn, signalling a potential pause in the rapid borrowing growth of recent years that made Saudi Arabia one of the most active emerging-market sovereign issuers. While dollar-denominated debt will remain the main focus, authorities stressed flexibility across currencies and a deliberate efforts to avoid oversupplying public market as Saudi Arabia increasingly leans on private financing.
Middle East sovereign investors shift from scale to strategy. According to the Global SWF’s 2026 Annual Report, Middle East state-owned investors strengthened their global role in 2025 by combining strong equity-driven portfolio gains with a sharp rise in large, strategic investments, reinforcing a shift away from oil dependence. Sovereign Wealth Funds helped push global state-owned assets to a record USD60 trillion, with the MENA region, dominated by Gulf SWFs, accounting for about 15% of the total. The “Gulf 7”, led by PIF and Mubadala, invested USD119bn in 2025, representing 43% of all global sovereign investment and a 43% increase from the previous year. Capital was increasingly deployed through mega-deals, club structure, and long-term partnerships, with a strong focus on AI, digital infrastructure, climate-related assets, and private credit, highlighting a clear transition from rapid balance-sheet expansion toward more strategic, future-oriented investment.
PMI readings point to stabilisation in Turkey and resilient expansion in KSA. In Turkey, the PMI continued to signal contraction at the end of 2025, but with encouraging signs of improvement as the headline index climbed to 48.9 in December, the highest in a year and up from 48.0 in November. Although still below the 50 mark that separates contraction from expansion, the softer declines in output, new orders and purchasing activity suggest that Turkey’s industrial sector was moving closer to stabilisation heading into 2026, with weakening contraction and mildly improved demand conditions. In contrast, Saudi Arabia’s PMI painted a more robust picture, showing continued expansion in December at strong 57.4, even though this represented a slight deceleration from November’s 58.5. The Saudi data reflect firm growth across output and employment in non-oil businesses, underpinning resilient domestic activity, albeit with easing momentum and moderated new order growth, indicating that the pace softened relative to recent months.
