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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 slips as Middle East tensions ease and supply risks recede. Oil prices edged lower as easing geopolitical tensions in the Middle East reduced the near-term risk of supply disruptions, with Brent falling toward USD67/b and WTI near USD63/b after sharp losses last week. Progress in US-Iran talks in Oman, which Iran described as a “step forward”, helped trim the risk premium that had supported prices earlier in the year, even as US signed further meetings and maintained military deployments in the region. While crude has risen since the start of 2026 despite concerns about a looming global glut, last week’s pullback reflected hopes of de-escalation, alongside uncertainty over India’s stance on Russian oil imports and broader demand signals. Markets are now turning to updated outlooks from the US, OPEC, and the IEA for direction, as additional geopolitical pressures, ranging from potential US tariffs on countries trading with Iran to tightening fuel supplies to Cuba, continue to shape sentiment.
Gold stabilises near USD5,000/oz as dip-buyers return after volatile selloff. Gold edged higher as investors stepped back in after an exceptionally volatile period for precious metals, with prices trading around the USD5,000/oz level and recovering about half of the losses from the late-January rout. The pullback followed a rapid rally fuelled by geopolitical risks, currency debasement concerns, and questions over Fed independence that ultimately ran too far, too fast, with speculative activity amplifying the swings. Official sector demand stayed supportive, with China’s central back extending gold purchases for a 15th consecutive month, underscoring a key structural pillar for the market. Attention is not shifting to upcoming US labour and inflation data for signals on monetary policy, alongside ongoing scrutiny of institutional dynamics at the Fed that continue to influence precious metal sentiment.
MIDDLE EAST - CREDIT TRADING
End of day comment – 06 February 2026. That was the quietest day so far this year in terms of activity. The week saw quite significant global market volatility. But looking at my universe over a week and blending out the day to day UST induced spread moves, the weekly move is rather tame, if measurable at all....in terms of flows today, the market was trying to buy selected ADQABU bonds, mainly 35s stood out today and closed 0.25pt higher in cash price/-4bp. On the sell side, seeing some BWICs in selected financial bonds (DHBKQD, BOSUH, QIBKQD) but without moving prices/ spreads. Primary markets took a back seat lately on the global market volatility. Binghatti new long 5y bond traded today slightly above reoffer, but what is missing in my universe is a benchmark sovereign or quasi sovereign issue. Until then it looks like we will continue to trade in a tight range.
MIDDLE EAST - MACRO / MARKETS
G42 leads USD1bn data centre expansion into Vietnam. Abu-Dhabi based G42 is leading a consortium to develop data centres and cloud computing services in Vietnam, with commitments of up to USD1bn, marking a major step in its expansion beyond the Gulf. The project, signed in Ho Chi Minh City, brings together G42, FPT Corp, and the Viet Thai Group, and includes plans for three data centres. The move reflects rising investment in AI-related digital infrastructure across Southeast Asia, despite constraints around land, power, and local opposition in some markets. Backed by sovereign wealth and Microsoft, G42 spans sectors from healthcare to cloud computing and is the main developer of OpenAI’s Stargate infrastructure project in the UAE. While it has faced US political scrutiny over past ties with Chinese firms, G42 says it has exited those investments and is now expanding globally with data centre and smart city projects across Africa and Asia, alongside initiatives such as its recently announced “Digital Embassies” framework unveiled at the World Economic Forum.
S&P affirms Iraq’s B- rating on rising oil output and strong reserves. S&P Global Ratings affirmed Iraq’s ratings at B- with a stable outlook, reflecting expectations that higher oil production in 2026 and continued spending restraint will help offset softer oil prices and elevated domestic and regional geopolitical risks. The agency projects oil output to rise as OPEC+ quotas ease and the Kirkuk-Ceyhan pipeline resumes exports, supporting average GDP growth of about 2% through 2029 after a contraction in 2025, even as Brent prices are assumed at around USD60/b in 2026. Lower oil prices are expected to push Iraq into small current account deficits in 2025-26, but international reserves are forecast to remain close to USD100bn, around 35% of GDP and well above external stability. Fiscal deficits are projected to stay moderate, averaging about 3% of GDP through 2029, constrained by capacity limits and the interim 1/12 spending rule following the November 2025 elections, while public debt is expected to rise gradually but remain manageable. Ratings remain constrained by weak institutions, high dependence on hydrocarbons, and ongoing US-Iran tensions, but supported by sizable reserves, low external debt, and a maintained exchange-rate peg to the US dollar.
