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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 set for biggest weekly drop since June on easing supply fears. Oil prices were heading for their steepest weekly loss since June, with Brent near USD66/b and WTI below USD64/b, down almost 5% for the week, as traders concluded that US efforts to end the Ukraine war would not disrupt supplies. President Trump’s pledge to meet Putin, along with positive signals from recent US-Russia talks, eased geopolitical risk premiums. Earlier in the week, Trump doubled tariffs on all Indian imports to 50% over its Russian crude purchases, prompting Indian refiners to scale back buying, while the US signalled possible future tariffs on China. Prices also fell on expectations of a supply glut later this year after OPEC+ eased output cuts and on concerns that Trump’s broader tariffs are slowing US economic growth and energy demand.
Gold rises on Fed shift bets and tariff threatening Swiss bullion trade. Gold was on track for its biggest weekly climb in a month as a slew of US tariffs took effect and President Trump appointed Council of Economic Advisers Chairman Stephen Miran as temporary Fed governor until January, a move expected to align the Fed with his call for lower interest rates. Gold traded near USD3,400/oz aiming for a 1% weekly gain. Separately, the premium for New York gold futures jumped after the Financial Times reported that the US has imposed tariffs on imports on one-kilo and 100oz gold bars. The decision threatens to disrupt global gold flows and strike at Switzerland’s position as the world’s largest refining hub, with one-kilo bars now subject to the country’s 39% tariff rate. The ruling has already led some Swiss refineries to halt or scale back shipments to the US amid uncertainty, as the change eliminates a widely assumed exemption and raises costs for meeting US gold demand.
MIDDLE EAST - CREDIT TRADING
End of day comment – 07 August 2025. Recent market movements are being driven less by large-scale client buying or aggressive street lifting of offers, and more by a steady, persistent flow of smaller retail-sized and ETF purchases, with limited selling interest. This results in price gaps upward without significant trades, followed by buyers accepting the new mid-levels due to a lack of issuance and the need to deploy cash. Current inquiries show 73.5% buys versus 26.5% sells, with the relentless buying pressure gradually pushing cash prices higher regardless of spreads, despite concerns over potential cracks from supply or macro risks. In KSA, spreads tightened and cash prices rose across the board, with the KSA 2061s still the only bond above z+200bps and 10-year bonds nearing z+100bps. A notable USD40million trade in KSA 5⅜ 2031s occurred, while the ARAMCO curve tightened 3–6bps with strength in the long end. PIFSKA tightened in sympathy, LT2s gained, and SNBAB 2035s traded above 102.25, boosting RIBLs. AT1s are expected to catch bids next, excluding RJHIAB. In Bahrain, demand remains weak beyond the 2030 maturities, with price gains driven by relative value positioning rather than organic buying, reflecting caution on risk.
MIDDLE EAST - MACRO / MARKETS
Egypt secured USD35bn gas supply deal with Israel’s Leviathan field. Egypt has signed a record USD35bn agreement to boost long-term natural gas imports from Israel’s Leviathan field, securing 130 billion cubic meters of supply between 2026 and 2040 as domestic demand surges and local output declines. The deal, Israel’s largest-ever export contract, will gradually increase deliveries from the current 4.5bcm annually to as much as 12.5bcm by 2023, offering Egypt cheaper pipeline gas, about 50% less than LNG imports, and potentially reducing its reliance on costly purchases. While the arrangement promises substantial savings and long-term energy security, it also deepens Egypt’s import dependence and exposes it to potential supply risks, as seen during the June disruption caused by conflict with Iran. Deliveries will be split into two phases, with 20bcm starting next year and the remaining 110bcm contingent on Leviathan’s expansion and a new pipeline via Nitzana.
Iraq launched 2024-28 plan to cut unemployment and diversify economy. Iraq has unveiled a 2024-28 development strategy aimed at reducing unemployment from 13% to 10%, achieving annual economic growth of 4.24%, stabilising inflation to protect vulnerable groups, and cutting poverty below 15%. Central to the plan is reducing reliance on oil by diversifying income sources and boosting non-oil sectors, with the oil sector’s share of GDP expected to drop by up to 25% over the period. The investment framework allocates 65% of capital spending to the government and 35% to the private sector, with success hinging on factors such as global oil prices, investment levels, industrial output, and trade performance. The plan comes as the IMF warns that high public wage spending has increased Iraq’s economic vulnerability, with non-oil growth slowing sharply from 13.8% in 2023 to as estimated 2.5% in 2024, while oil revenues continue to account for more than 90% of state income, totalling nearly IQD127 trillion.
