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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
Energy shock from Hormuz blockade drives oil and gas surge. Oil and natural gas prices spiked sharply after the Strait of Hormuz blockade by the US, following failed negotiations between the US and Iran. Brent surged over 9% toward USD104/b, while European gas jumped nearly 18%, as the blockade, targeting vessels linked to Iranian ports, tightened already strained supply chains. The ongoing Middle East conflict has disrupted energy flows, prompting a scramble for crude cargoes and raising inflation and growth concerns worldwide. Trump signalled further escalation, including potential strikes, while Iran has maintained partial oil exports, primarily to China, despite reduced volumes. Risks of broader disruption loom, with possible Houthi attacks at Bab el-Mandeb threatening Red Sea transit, even as Saudi Arabia restores pipeline capacity. The situation underscores mounting geopolitical tension, stalled nuclear talks, and the potential for prolonged supply shocks highlighted by OPEC.
Gold rebounds slightly as strike delay eases pressure. Gold prices declined as rising inflation concerns outweighed its safe-haven appeal following failed US-Iran talks and plans to blockade the Strait of Hormuz, which intensified the global energy shock. Gold dropped as much as 2.2% to below USD4,650/oz, pressured by a stronger US dollar and surging oil and gas prices after President Trump signalled stricter measures on vessels linked to Iran. Higher energy costs have increased the likelihood that central banks will delay rate cuts or even tighten policy, negative for non-yielding gold. Inflation data reinforced this outlook with US prices posting their largest rise in nearly four years, driven by gasoline. Although gold initially fell sharply amid liquidity pressures, it has partially rebounded more recently as concerns about slowing economic growth began to counterbalance inflation risks.
MIDDLE EAST - CREDIT TRADING
End of day comment – 10 April 2026. The squeeze remains on. Like mentioned yesterday it didn't feel like the market is worried about risk over the weekend, and indeed GCC bonds were bid up again today. The scores: ADGB -3bp, BHRAIN -10bp, KSA -3bp, QATAR -5bp, KUWIB -10bp, OMAN -8bp. To be sure flows were evenly balanced between buyers/sellers as some curves/bonds saw profit taking in the afternoon. BHRAIN was one of them were 38s closed 0.50pt off the high print. ADGB also has sellers into higher cash/tighter spreads in the long end with last trades in 49s/50s +0.25pt/-3bp on the day. Both QATAR and ADGB saw also early morning activity in the belly on the back of the private placements, QATAR 33s last up at 101.75. On the fins/corps side it is getting a bit more technical. FABUH saw selling in 31s unch/+0bp and I also saw some selling in ALDAR hybrids unch/+0bp. On the other hand, DPWDU got bid up today tightening around 8bp with cash up to 0.625pt higher.
MIDDLE EAST - MACRO / MARKETS
Regional economic resilience and rating actions for Egypt and Turkey. S&P and Fitch have updated their assessments for Egypt and Turkey, respectively, as both nations navigate the economic fallout of renewed Middle East conflict in early 2026. Egypt’s ‘B’ rating was affirmed with a stable outlook, supported by a significant accumulation of international reserves (USD52.8bn) and a commitment to a market-determined exchange rate, despite a 13% currency depreciation and rising current account deficits. Conversely, Turkey’s outlook was revised from positive to stable (BB-) due to a sharp decline in international reserves, falling by USD48bn in two months, as the central bank intervened to defend the lira amid heightened energy costs and capital outflows. While both countries face intensified inflationary pressures and elevated external financing requirements, their medium-term stability hinges on maintaining reform momentum, managing high debt-servicing costs, and leveraging strategic geopolitical roles to ensure continued support from multilateral and regional partners.
Saudi oil exports to China slump amid Middle East war and transit disruption. Saudi Arabia’s crude shipments to China are projected to drop by 50% in May, falling to approximately 20 million barrels as the ongoing conflict in the Middle East and the closure of the Strait of Hormuz severely disrupt global energy flows. Following the failure of diplomatic talks and threats of a total maritime blockade, Saudi Aramco has raised official selling prices to record levels, while the limited capacity of the Yanbu port on the Red Sea remains insufficient to offset the loss of Persian Gulf export routes. This logistics bottleneck, combined with increasingly erratic benchmark pricing for Dubai and Oman crude, has forced Asian refiners to accept limited grades and navigate a market defined by soaring costs and supply volatility. Going forward, the stability of global energy markets will depend on whether Saudi Arabia can successfully expand its Red Sea logistics or it’s a diplomatic breakthrough can reopen the Persian Gulf, as prolonged transit restrictions risk forcing China and other major importers to aggressively diversify their energy sources away from the region.
