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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 faces second weekly decline amid rising global supply. Oil prices remained under pressure, with Brent hovering near USD64/b and WTI just below USD60/b, poised for a second straight weekly drop. The decline comes as OPEC+ and other producers, including the US and Brazil, boosted output, intensifying worries about a growing global supply. The International Energy Agency recently warned that the projected 2026 oversupply could be even larger than earlier estimated, while narrowing prompt time spreads signal deteriorating market sentiment. Traders now await key supply-demand reports from the IEA and OPEC next week for clarity on market balance. Meanwhile, geopolitical disruptions, such as Ukrainian attacks on Russian refineries and renewed US sanctions on Rosneft and Lukoil, have added modest upside risks. Still, overall market tone remains bearish as supply growth continues to outweigh disruption risks despite lingering volatility.
Gold rises as weak US jobs data fuels expectations of further Fed rate cuts. Gold climbed toward USD3,990/oz today after data showing the largest October job cuts in over two decades bolstered expectations of a December Fed rate cut. The softer employment outlook prompted the biggest drop in 10-year Treasury yields in a month, strengthening demand for non-yielding assets like gold. While US officials remain divided on the policy path ahead, with Chicago Fed President Austan Goolsbee expressing unease about continued easing amid limited data from the ongoing government shutdown, traders are increasingly betting on looser monetary policy conditions. Gold remains more than 50% higher YTD, supported by global rate cuts, steady central bank buying, and strong inflows into gold-backed ETFs.
MIDDLE EAST - CREDIT TRADING
End of day comment – 06 November 2025. Another day of big UST moves. Today UST prices are materially higher on job data and risk off sentiment, which makes it a V shaped recovery from yday weakness. But it did nothing else in our cash products than widen spreads. Put it another way yday prices were lower, today prices were unchanged to just a tad higher. We pointed out previously when spreads tightened on UST weakness that the market felt much weaker than spread moves implied, and today was sort of 'normalisation' day. Into the close we are seeing light buying interest in IG names, mainly on the sovereign side but that doesn't turn the market around. New QATAR 35s sukuk remains an outperformer closing +0.25pt/+3bp. Against this the ADGB and QATAR curves are about 5/8bp wider with cash prices broadly unchanged (a touch higher in QATAR long end). Quasi sovereign remain technical, MUBAUH long end today resumed its outperformance with 51s closing +0.5pt/+2bp. Belly bonds in the 5-10y area though saw net selling and didn't moved at all in cash price terms closing generically 8/9bp wider. In corps new ITTHAD was well received with local retail buying throughout the morning closing 100.375/100.625 from 100 reoffer. Other names were offered though, namely new DUBAEE 30s closing -0.125pt/+10bp.
MIDDLE EAST - MACRO / MARKETS
Saudi Arabia posts SAR88.5bn budget deficit in Q3 2025. Saudi Arabia reported a budget deficit of SAR88.5bn (USD23.6bn) in the Q3 2025, as spending outpaced revenues. Total government revenue reached SAR269.9bn, while expenditures climbed to SAR358.4bn, reflecting continued momentum in public investment and social programs. The gap highlights the Kingdom’s commitment to maintaining fiscal stimulus to support economic diversification and vision 2030 projects despite weaker oil receipts. Non-oil revenue remains a key focus for the government, and policymakers are expected to balance fiscal discipline with growth priorities in the quarter ahead.
UN lifts sanctions on Syria’s leadership, marking shift toward reintegration. The United Nations Security Council voted overwhelmingly to lift sanctions on Syrian President Ahmed Al-Sharaa and Interior Minister Anas Hasan Khatta, signalling a turning point in Syria’s post-war recovery and international reintegration. Backed by 14 members with China abstaining, the resolution follows a US initiative ahead of Al-Sharaa’s upcoming White House meeting with President Trump. US framed the move as recognition of a “new era” for Syria, highlighting the government’s pledges to combat terrorism, dismantle chemical weapons, and foster stability. The development follows earlier US actions easing sanctions on Syria while maintaining restrictions on former President Bashar Al-Assad and his associates. The decision paves the way for Syria’s expected announcement of its formal entry into The Global Coalition to Defeat ISIS, offering a potential boost to investor sentiment and prospects for economic normalization after more than a decade of conflict. Concurrently, Gulf countries are stepping up investment efforts. Syria attracted around USD40bn in foreign pledges led by the UAE, KSA, and Qatar so far, including multibillion-dollar initiatives in power generation, infrastructure and tourism.
