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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 rises as US-Iran tensions offset supply concerns. Oil prices climbed for a second consecutive day as geopolitical tensions between the US and Iran outweighed signs of increasing global supply. Brent moved toward USD70/b and WTI near USD65/b, supported by concerns over potential military escalation despite President Trump signalling a preference for a nuclear deal with Iran. While crude has posted gains in nearly every week this year due to recurring geopolitical risks, data showed US inventories surged by 8.5 million barrels to the highest level since June, reinforcing expectations of ample supply. The International Energy Agency (IEA) is set to release its latest market outlook, which may again highlight a potential surplus. Meanwhile, US naval deployments in the region and shifting dynamics around Venezuelan oil flows remain in focus.
Gold eases after strong US jobs data dampen rate cut bets. Gold slipped as much as 0.8% after stronger than expected US payroll data and an unexpected drop in unemployment reduced expectations for near-term Fed rate cuts, with traders now pushing back projections for the next cut to July. While lower rates typically support non-yielding assets, gold held above USD5,000/oz and has recovered about half of the sharp losses surged after its late-January peak above USD5,595/oz, when an overheated rally triggered a two-day 13% plunge. Despite the recent pullback, gold remains supported by geopolitical tensions, concerns over Fed independence, and continued diversification away from currencies and sovereign bonds. Silver fell as much as 3.2%, extending its heightened volatility, and remains roughly one-third below its January record highs, even as market data points to a sixth consecutive annual supply deficit driven by strong investment demand.
MIDDLE EAST - CREDIT TRADING
End of day comment – 11 February 2026. It was a very quiet morning with little activity as the market awaited NFP. Post NFP it was a bit of a rollercoaster both in price and spread terms. However it never felt like flows would be flipping to one side or the other and on the UST highs and on the UST lows interest was fairly balanced. That also show in trade data where buying and selling flows are 50/50 today. In terms of market movers sovereign bonds today outperformed both in IG and higher beta. QATAR long end managed to close unch in cash price terms/2bp outperforming ADGB a touch which had supply during the day in 54s (-0.25pt/unch). In higher beta SHARSK/SHJGOV had again a very strong bid in SHARSK 36s (+0.125pt/-3bp)which also gave a bid to SHJGOV belly bonds (33s closing +0.25pt/-5bp). OMAN had early morning interest in long end bonds which prevailed in the after NFP volatility period, 47s closing +0.25pt/-3bp. Quasi sovereign markets are a bit more technical in general, the ADGB complex has net sellers, mainly in ADNOCM (+1/2bp) but selected bonds remain well bid like ADQABU 35s today closing unch/-2bp. Primary markets didn't revealed any new supply, new EBIUH EUR had a quiet start in the secondary, closing 100.00/100.25 from 100 reoffer.
MIDDLE EAST - MACRO / MARKETS
Egypt’s external buffers strengthen as inflation continues to ease. Egypt entered 2026 with an improved macroeconomic backdrop, marked by record FX reserves and a sustained moderation in inflation. Net international reserves rose to an all-time high of USD52.6bn at the end of January, reflecting stronger foreign currency inflows, improved remittances, and enhanced confidence in economic management. The build-up in reserves strengthens Egypt’s capacity to meet import needs and external debt obligations while reducing exposure to global shocks. Meanwhile, headline inflation eased to 11.9% in January from 12.3% in December, and a sharp decline from the 38% peak recorded in September 2023. The improvement follows policy measure introduced since March 2024, including tighter monetary policy, greater exchange rate flexibility, and fiscal adjustments, supported by ongoing IMF programs totalling USD9.3bn. Although inflation is expected to remain above single digits in the near term, the combination of stronger reserves, moderating price pressures, and continued reform implementation points to a more stable and resilient economic position.
Saudi Arabia triples February sukuk issuance to USD2.1bn. Saudi Arabia raised SAR7.9bn (USD2.1bn) through domestic sukuk issuance in February, more than tripling January’s SAR2.3bn sale, reflecting accelerated funding via Shariah-compliant instruments. The issuance was divided into five tranches maturing between 2031 and 2041, with the largest portion of SAR3.2bn due in 2041. The sharp 248% m/m increase underscores growing activity in the Kingdom’s local debt market as authorities diversify funding sources. KSA’s broader debt market has expanded rapidly, with outstanding debt exceeding USD520bn in 2025 and sukuk accounting for about 62% of the total. Dollar debt issuance surged 49% to around USD100bn last year, positioning the Kingdom as the largest US dollar debt and sukuk issuer among EM excluding China.
