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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 set for second weekly decline on glut concerns and Iran talks. Oil headed for its first back to back weekly loss this year amid broader risk-off sentiment, growing concerns over a global supply glut, and expectations that US-Iran nuclear negotiations could stretch on, reducing the likelihood of near-term military disruption. Brent held above USD67/b after a sharp drop, while WTI traded near USD63/b, as equities and commodities weakened. The International Energy Agency reiterated forecasts of a record 3.7mb/d surplus in 2026, with global inventories already rising at the fastest pace since 2020. Additional supply signals emerged from Venezuela, where plans to expand production with Chevron and Repsol could boost output, further reinforcing expectations that global supply may outpace demand this year.
Gold rebounds ahead of US inflation data after sharp selloff. Gold recovered part of its recent losses as dip-buyers returned ahead of key US inflation data, rising as much as 1.4% after 3.2% drop in the previous session, its largest one-day fall in a week. The earlier decline coincided with broader market jitters and was likely amplified by margin calls, algorithmic trading, and profit-taking, while silver also slid sharply. Despite recent volatility following a historic late-January rout, gold is set to end the week little changed. Investors are now focused on upcoming US inflation figures, which may influence expectations for Fed policy after strong jobs data reduced the likelihood of near-term rate cuts. Gold remains below its January 29 record high above USD5,595/oz, having fallen about 14% in two sessions after that peak, though longer-term drivers such as geopolitical tensions and monetary policy uncertainty continue to shape market sentiment.
MIDDLE EAST - CREDIT TRADING
End of day comment – 12 February 2026. There is risk off in the air. Even before credit indices widened and stocks took a hit, my GCC credits never found any traction. Spreads just kept on widening with UST moves intraday and every attempt by the street/ market to bid bonds up was met by selling. The only exception to that was in the morning strength in SHARSK/SHJGOV again, as the squeeze in SHARSK 36s got the market interested in other bonds on the curve like SHJGOV 33s (+0.375pt/-1bp), but that bid also faded in the afternoon. IG credits couldn't follow UST moves higher, QATAR was stronger than ADGB especially in the long end, QATAR 50s closed +0.375pt/+2bp vs ADGB 54s +0.125pt/+4bp. Quasi sovereign issues again underperformed sovereign today, most cash prices didn't moved at all and bonds closing anywhere from +4/6bp. Still seeing selling in ADNOCM curve with 54s closing unch/+5bp. In primary markets FAB priced a 450mm GBP 5.5y at G+75bp and MASHREQ a 500mm USD PNC5.5 AT1 at 6.25%. Ahead of CPI and the weekend though is hard to see the market gaining much traction tomorrow.
MIDDLE EAST - MACRO / MARKETS
Egypt cuts rates and reserve requirements as easing cycle continues. The Central Bank of Egypt (CBE) cut its key policy rate by 100bps to 19% and reduced the required reserve ratio by 2ppt to 16%, aiming to enhance liquidity and improve transmission of rate cuts to short-term yields. The move follows easing inflation in January and reflects growing confidence in the disinflation path, although non-food inflation remains relatively persistent and fiscal consolidation measures have had a higher-than-expected pass-through effect. The CBE views recent food price increases as seasonal ahead of Ramadan and expects inflation to move toward its 7% (±2%) target range. Looking ahead, further easing is anticipated, with expectations of cumulative cuts of around 400bps by end-2026, supported by continued inflation moderation. Upcoming large Treasury bill maturities in March will test the stickiness of foreign portfolio flows, while the reserve requirement cut is expected to inject liquidity, support T-bill demand, and narrow the gap between policy rates and market yields.
IMF: Qatar demonstrates resilience with strong growth and fiscal discipline. An IMF mission concluded that Qatar continues to show strong economic resilience despite global economic and geopolitical shocks, supported by sound macroeconomic management, LNG production expansion, and reform implementation under the Third National Development Strategy (NDS3). Growth recovered to 2.4% in 2024, strengthened to around 3% through Q3 2025, and is projected to average about 4% over the medium term, while inflation is expected to remain near 2% in line with the US dollar peg. Fiscal and current account surpluses are set to continue, and the financial sector remains stable under strong regulation and supervision. The IMNF noted that prudent fiscal policy, revenue and expenditure reforms, and anchoring the fiscal framework to intergenerational equity will support sustainability, while recommending further revenue diversification, spending efficiency, and adoption of a comprehensive medium-term fiscal framework.
