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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 rebounds after five-day slide on tariff threats and diplomatic hopes. Oil prices rose after a five-day losing streak, the longest since May, as investors reacted to US efforts to penalise Russian crude buyers and President Trump’s push for a Ukraine peace deal. Brent climbed above USD67/b, while WTI hovered near USD65/b, partially recovering from an 8.7% drop over the previous sessions. Trump doubled tariffs on Indian goods over its Russian energy purchases and hinted China could face similar measures. He also signalled a possible meeting with President Putin and Zelensky to broker peace, warning of more penalties tied to oil trade. Despite the bounce, oil remains under pressure from rising OPEC+ supply, set to increase by 547,000b/d in September, and concerns over global demand as Trump’s broader tariff policies weigh on growth. Meanwhile, Saudi Arabia raised price for a second month, reflecting confidence in regional demand.
Gold rises on trade tensions and policy uncertainty. Gold rose around USD3,380/oz as traders reacted to renewed trade tensions triggered by President Trump’s threat of a 100% tariff on semiconductor imports, aimed at bringing production back to the US. The move, along with increased tariffs on Indian goods and potential new duties on Japanese products, boosted safe-haven demand. Markets also focused on the likely nomination of a pro-Trump interim Fed governor expected to support monetary easing, another positive for non-yielding asses like gold. Gold has gained nearly 30% this year, driven by rate cut expectations, central bank buying, and a shift away from dollar assets, though most gains occurred earlier in the year amid heightened global uncertainty.
MIDDLE EAST - CREDIT TRADING
End of day comment – 06 August 2025. KSA spreads remained solid, tightening by approximately 3bps across major curves, although trading volumes were weak. A few retail rebalancing flows passed through the system, with limited activity aside from some KSA 54 prints driven by Asian demand. ARACEN results were underwhelming, with concerns around fair value adjustments boosting EBITDA—a recurring issue in Saudi high-yield bonds. Dividends continue to be paid despite the approaching maturity of the 26s, raising liquidity concerns. While around USD500 million might be raised through dividend suspension, arrears collection, and cash accumulation, there is no indication that dividends will cease imminently. Bonds were marked down by 2 points, though no trades were reported. In Bahrain, a small supply in 37s came out from a dealer, but the retail lists at the end of the day had many BHRAIN bonds on them. Cash prices and spreads going out mainly unchanged with the exception of BHRAIN 7 28s which are randomly -10bps and +0.35 points.
MIDDLE EAST - MACRO / MARKETS
Syria secures USD14bn in investment deals to rebuild infrastructure. Syria signed USD14bn worth of agreements with regional and international firms for 12 major investment projects, the largest since Western sanctions were eased. Key deals include a USD4bn expansion of Damascus International Airport by Qatar’s UCC holding, and a USD2bn subway system in the capital, to be developed by the UAE’s National Investment Corporation. Other projects include 60 residential towers housing 20,000 units near Damascus. Syria’s Investment Authority emphasised the country’s opened to business and commitment to rebuilding a modern economy. The agreements mark a major step in Syria’s post-war economic recovery, following earlier deals including USD6bn in Saudi Investment and a USD7bn energy project with Qatar, Turkey, and US firms. US envoy Tom Barrack hailed the moves as critical to building a peaceful and prosperous Syria.
Egypt’s FX reserves reach record high on surging remittances and foreign flows. Egypt’s net foreign exchange (FX) reserves rose by USD336 million in July to a record USD49bn, driven largely by a sharp increase in remittances from Egyptians abroad, which surged nearly 70% y/y to USD32.8bn. the central Bank of Egypt (CBE) noted that remittance between January and May alone grew by over 86%, boosting reserve coverage to 8.1 months of imports. The rise also reflects strong foreign inflows following the liberalisation of the exchange rate, a USD35bn UAE investment deal, and multilateral financing, including USD2.5bn recently approved by the IMF as part of its loan package and Sustainable Fund. Additionally, net foreign assets in the banking system rose to USD14.94bn in June, their highest in four years, supported by growth at commercial banks and the central bank. Since the March 2024 IMF deal and broader financing from the EU and World Bank, Egypt’s FX reserves have increased by USDD13.5bn, easing pressures on the local currency market and reinforcing macroeconomic stability.
