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 ahead of key supply reports and US shutdown progress. Oil prices gained as global markets were buoyed by progress toward ending the US government shutdown, while traders awaited a series of reports expected to clarify the extent of a potential supply glut. Brent climbed above USD64/b and WTI hovered near USD60/b, snapping two weeks of declines. Upcoming reports from OPEC, the International Energy Agency, and the US Energy Information Administration are expected to shed light on supply-demand dynamics, as recent output increases by OPEC+ members and non-allied producers such as the US have raised concerns over oversupply. Meanwhile, US sanctions on Russian Rosneft and Lukoil remained in focus, though Hungary secured an exemption due to its heavy reliance on Russian energy imports.
Gold rises as weak US data boosts safe haven demand. Gold advanced for a second consecutive session, trading near USD4,050/oz as signs of a weakening US economy outweighed progress in negotiations to end the record-breaking government shutdown. Gold built on Friday’s gains after a key gauge of US consumer sentiment fell to one of its lowest levels on record, with the shutdown and stubborn inflation dampening household confidence and growth prospect. While the political stalemate in the US appears close to resolution after moderate Senate Democrats agreed to back a deal to reopen the government, the data blackout has left the Fed navigating economic policy with limited visibility. Despite easing about 8% from its October record high of USD4,380/oz, gold remains up more than 50% YTD, underpinned by persistent demand from central banks and investors seeking refuge amid economic uncertainty.
MIDDLE EAST - CREDIT TRADING
End of day comment – 07 November 2025. Weak close and markets are closing at the wides. It is MENA Friday and with the usual low volume and participation, it is always a stretch to read much into the moves. But equally with the macro weakness and from the few visible prints and trades, there is no doubt that risk is off. GCC bonds again had the combination of lower cash prices and higher UST prices which resulted in another widening of the market to the tune of 3/5bp. In ADGB seen some late prints in long end bonds, 49s closing -0.25pt/+4bp. QATAR had a relatively quiet day as did higher betas OMAN and MOROC which widened in line 4/5bp, there still isn't much of credit differentiation between low and high beta yet. New issues had ITTHAD again with local retail interest holding around the 100.50 level. Haven't seen much requests/trades in new QIIBKQD 30s which follows the pattern of new SIB 30s. It just feels like there is no big free float in these sukuks. BOSUH announced a new 5y Regs which will almost certainly be more active and more of a test of new issue pricing.
MIDDLE EAST - MACRO / MARKETS
Israel outlook upgrade reflects reduced geopolitical risk. S&P revised Israel’s sovereign credit outlook to “stable” from “negative”, while affirming its rating at ‘A/A-1’, citing reduced security risks following US-brokered ceasefire between Israel and Hamas. The truce, supported by the US, Qatar, Turkey, and Egypt, has helped contain direct military confrontation and created space for economic recovery. Israel’s GDP, which contracted 4% y/y in Q2 due to the conflict with Iran, is expected to rebound strongly, reaching 5% growth in 2026 as consumer confidence and labour supply recover. Fiscal deficits are projected to narrow gradually 4.8% of GDP by 2026, supported by lower defence spending and improved revenues, though debt will remain elevated at about 67% of GDP through 2028. S&P highlighted Israel’s robust external position, with international reserves exceeding USD232bn and a current account surplus averaging 3% of GDP, reflecting strong tech exports and domestic savings. The stable outlook assumes the ceasefire holds and broader regional tensions stay contained, while sustained growth and fiscal improvement could lead to an upgrade. Elevated defence needs, political uncertainty ahead of elections, and lingering geopolitical risks remain key constraints on Israel’s credit profile.
Egypt inflation reverses downtrend in October. Egypt’s headline inflation accelerated to 12.5% y/y October from 11.7% y/y in September, ending a four-month cooling streak. The increase was mainly driven by the 13% fuel price hike announced on October and the implementations of a rent law that allowed landlords to raise monthly rents, pushing up housing costs. Higher food and non-alcoholic beverage prices also added to over pressure. Despite the uptick, inflation remains far below the 38% peak recorded in September 2023, supported by fiscal reforms and IMF-backed stabilisation efforts. Going forward, we expect the Central Bank of Egypt (CBE) to continue its monetary easing cycle at the policy meeting on November 20, as elevated real interest rates still provide room for further rate cuts even amid short-term price volatility.
