To read the full report, please download the PDF above.
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 rises on Trump’s Iran warning and Venezuela supply shift, despite glut fears. Oil extended its rally as traders weighed escalating geopolitical risks against expectations of a global supply glut later this year. WTI traded around USD58/b after jumping 3.2% yesterday, while Brent hovered near USD62, supported by President Trump’s warning that the US would hit Iran “hard” if unrest there turns violent. Sentiment was further lifted after Trump signalled support for a bipartisan bill targeting buyers of Russian crude, including China and India. Still, despite the strongest daily rally since October and a likely weekly gain, prices face medium-term pressure from an expected surplus. Markets are also digesting US’s efforts to reshape Venezuela’s energy sector, including talks between US officials and oil executives on rebuilding output, rising shipments by Chevron and renewed interest traders, developments that could redirect Venezuelan crude flows from China toward US refiners.
Gold holds steady as dollar strength and US jobs data shape rate outlook. Gold steadied near USD4,465/oz as investors weighed a firmer US dollar and awaited key US economic data that will help set the tone for interest rate policy in 2026. Gold is up 3.4% on the week but faces some pressure after US jobless claims came in slightly below expectations. Attention is now on today’s December nonfarm payrolls report, which is expected to show solid hiring but steady unemployment, a mixed picture that may reduce urgency for the Fed to resume rate cuts. Gold is coming off its strongest annual performance since 1979, gaining about 65% in 2025 and hitting a record high of USD4,549.92 in December. Traders are also closely watching the upcoming selection of a new Fed chair, with Treasury Secretary Scott Bessent saying President Trump is expected to name a successor to Jerome Powell later this month.
MIDDLE EAST - CREDIT TRADING
End of day comment – 08 January 2026. Price action overall was weak today. With UST yields higher spreads are not materially wider, but with the move yesterday the widening trend remains intact. Flows are also mostly initiated by sellers, which leaves the market with an overall weaker feel. Duration bonds remain for sale, especially again by ETFs. What finds easily clearing levels are IG sovereign bonds like ADGB/QATAR which closed about -0.50pt/+1bp in the long end. It starts though to become more challenging in quasi sovereign and higher betas. OMAN for example had again a day to forget in the long end closing -0.75pt/+3bp. Then there are the new issues which are getting received with mixed results. New FABUH 31s had a tight range and traded mostly around 100.02/100.05 and closed around 100. New ALDAR hybrid 56s though had a rough start with sellers off the gate closing 99.00/99.25 from 99.574 reoffer with only small retail buying supporting it. Overall it feels the market could deal with new supply in 5/10y, however the price sensitivity in secondary markets towards new issues is increasing, we are missing the NIPs.
MIDDLE EAST - MACRO / MARKETS
PWC: five economic forces shaping the GCC in 2026. According to PwC, as the GCC enters 2026, economic policy is shifting decisively from a focus on expansion toward strengthening resilience across trade, supply chains, technology adoption, labour markets and fiscal frameworks, as governments navigate a softer oil price outlook, tighter global financial conditions and rising geopolitical competition. Buildings on diversification momentum in 2025, the region is expected to broaden trade and investment partnerships, deepened itself as a central hub for east-west and south-south commerce. At the same time, securing access to critical minerals is becoming a strategic priority as the GCC advances industrialisation and energy transition ambitious. AI is moving from ambition to execution, with large-scale investments paving the way for widespread commercial employment across finance, energy, logistics, and retail. On the fiscal front, lower hydrocarbon revenues are accelerating efforts to strengthen resilience through spending prioritisation, privatisation and PPPS, and deeper non-oil revenue mobilisation, making 2026 a pivotal year for embedding long term economic resilience across the region.
Qatar boosts foreign reserves, to reinforce riyal peg and financial stability. Qatar Central Bank (QCB) reported that its total foreign currency liquidity and international reserves rose to USD71.7bn in December 2025, up 2.65% from a year earlier, reinforcing the country’s financial buffer that underpins the riyal’s peg to the US dollar. Official reserves climbed to USD55.5bn, driven largely by a sharp increase in global holdings, which surged by USD6.8bn to USD16.1bn, alongside higher IMF Special Drawing Rights. While holdings of foreign treasury bonds are overseas bank deposits declined, the overall reserve position remains robust and diversified. The increase mirrors a broader trend across the GCC, following a sharp rise in Saudi Arabia’s reserves, highlighting the region’s focus on strengthening monetary credibility, managing liquidity, and safeguarding financial stability amid global market volatility.
