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 drops again as market shrugs off Trump’s threat on Russia. Oil prices fell for a second straight session, with Brent dropping below USD67/b, after US President Trump’s latest plan to pressure Russia stopped short of immediate new actions targeting Russia’s energy exports. While Trump threatened 100% tariffs on countries continuing to buy Russian oil if a peace deal is not reached within 50 days, effectively hitting at secondary sanctions for major buyers like India and China, the lack of concrete steps tempered market reactions. Brent has declined about 8% this year amid Trump’s escalating trade war and OPEC+ easing supply cuts, fuelling concerns of an oversupplied market in the second half. Still, current fundamentals like Brent’s prompt spread suggest near-term support. Meanwhile, strong June refining activity in China with output hitting 15.2mb/d offered a bright spot on the demand side.
Gold steady as market awaits clarity on Trump’s trade moves. Gold traded near USD3,347/oz after slipping 0.4% on 14 July, as President Trump indicated he was open to more tariff negotiations with key economies like the EU. The signal helped ease demand for havens, though it clashed with his stance that tariff letters sent to governments are effectively binding deals. The metal has surges over 25% this year, hitting a record above USD3,500 in April, but momentum has slowed as markets wait for more clarity on the evolving trade landscape. It tensions escalate before August, gold could retreat from its peak.
MIDDLE EAST - CREDIT TRADING
End of day comment – 14 July 2025. Strong day overall. Flows are still tracking below average given the time of the year. That said there was a notable shift in flow direction in the afternoon. The morning saw a continuation of ETF selling and cash market adjusting to the left post weekend tariff headlines. With the recovery in macro markets that gave way though to some RM inflows in the afternoon. Long end IG remains well bid despite the UST gyrations, where 30 year yields are testing 5%. But the yield bid seems strong, especially in QATAR today where 49s outperformed closing -0.25pt/-2bp. Quasis had a quieter day but here as well we are starting to see long end bonds outperforming with some activity in ADNOCM 54s and ADQABU 54 closing -0.125pt/-3bp. High betas underperformed a touch, OMAN saw some morning selling on continuous profit taking post upgrade. 47s closing -0.375pt/unch. Markets continue to brush off any negative tariff headline. UST though continued their weakness but with stable macro risk markets that tightens spreads especially in the long end. Primary markets remain radio silent given the time of the year, so expect technicals and flows to remain the main price driver.
MIDDLE EAST - MACRO / MARKETS
Saudi Arabia reviews feasibility of The Line as budget pressures mount. Saudi Arabia has commissioned consulting firms to review the feasibility and scale of The Line, its USD500bn, 170km car-free city within the Neom mega-project, as it reassesses priorities under Vision 2030. The review, led by a unit of the Public Investment Fund (PIF), may result in changes to timelines, scale, or design, although no final decisions have been made. While Neom insist The Line remains a strategic priority, the move reflects growing financial strain amid Brent crude prices hovering near USD71/b, well below the Saudi’s fiscal breakeven oil price of USD96/b. The assessment comes as the government faces investor calls and IMF encouragement to rationalise giga-projects to ensure long-term sustainability, especially with major international events like the 2030 World Expo & 2034 FIFA World Cup on the horizon.
Saudi Arabia to invest USD8.3bn in major solar and wind expansion. A consortium led by Saudi Arabia’s ACWA Power, alongside Aramco Power and backed by the Public Investment Fund, has committed USD8.3bn to develop 15 gigawatts of solar and wind energy projects across the kingdom. The agreements signed with the state electricity buyers, include five solar and two wind farms across Riyadh, Mecca, Medina, and Aseer, and are slated for completion by 2028. The initiative is part of Saudi Arabia’s Vision 2030 plan to generate 50% of electricity from renewables and reach net-zero carbon emissions by 2060. With just 4.34GW of solar capacity as of 2024, the kingdom aims to scale up to 130GW by the decade’s end. The government highlighted the projects as “among the world’s largest” at globally low costs, reflecting Saudi Arabia’s financing efficiency and growing investor confidence. ACWA Power, active in 14 countries, also plans to expand into China to tap into its vast renewables market.
