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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 gains as geopolitical risks clash with surplus forecasts. Oil extended last week’s gains, with Brent holding above USD67/b and WTI near USD63/b, as markets balanced rising geopolitical risks against forecasts of oversupply. President Trump renewed pressure on NATO members to halt Russian oil imports, warning he could impose “major” sanctions if Europe follows suit, while also pushing G7 allies to consider tariffs of up to 100% on China and India for their purchases of Russian crude. Although many European countries have cut Russian supplies, Hungary and Turkey remain key buyers, complicating efforts to fully isolate Russia. Meanwhile, traders monitored escalating risks from Israel’s strike in Qatar and Ukraine’s drone attacks on Russian refineries and ports, including a major hit on the Kinef site. Still, bearish fundamentals persist, with OPEC+ resuming output earlier than expected and the IEA projecting a record surplus next year, keeping oil prices confined to a narrow range.
Gold holds near record as Fed cuts and geopolitical risks drive demand. Gold hovered near record highs at around USD3,640/oz as traders awaited this week’s Fed meeting, widely expected to deliver a 25bps cut amid signs of labour market weakness and the possibility of further easing into 2026. Lower Treasury yields and a weaker dollar have reinforced gold’s appeal, while persistent geopolitical risks, Trump ‘s tariff-driven policies, and central bank buying continue to provide support. Gold, up nearly 40% this year and having broken through its inflation-adjusted peak, remains underpinned by haven demand and political uncertainty, with some forecasts suggesting it could climb toward USD5,000/oz. Still, potential easing in US-China trade tensions poses a downside risk, while in Asia, a sharp 19% jump in Thai gold exports to Cambodia has raised concerns over possible money-laundering activity.
MIDDLE EAST - MACRO / MARKETS
IFC launches USD1bn investment drive to strengthen Iraq’s private sector. The International Finance Corporation (IFC), part of the World Bank Group, announced a USD1bn package of investments and partnerships to bolster Iraq’s private sector, building on the USD2.5bn it has already deployed in the country since 2005. The financing will target energy, infrastructure, agribusiness, housing, finance, and healthcare, with major projects including a USD500 million syndicated loan for Basrah Gas to advance gas-flaring reduction. Additional initiatives include feasibility studies in farming and healthcare, trade finance facilities, and SME credit expansion through partnerships with local banks. The IFC emphasised Iraq’s potential as a fertile ground for investment, citing more than USD100bn pledged since 2023, though challenges remain with fiscal deficits, governance bottlenecks, infrastructure gaps, and an economy still 90% reliant on oil revenues. Since 2005, IFC-supported projects have created 28,000 jobs, including 5,000 for women, and with this new initiatives, it aims to deepen diversification, attract foreign capital, and drive sustainable, broad-based economic growth.
Fitch upgraded Tunisia on stronger external position but warns of fiscal vulnerability. Fitch upgraded Tunisia’s rating from CCC+ to B-, citing improvements in the external position driven by lower current account deficits, resilient foreign direct investments, and steady support from multilateral and bilateral partners that have bolstered reserves and external liquidity. External financing has held up despite the absence of market access since 2021 and no IMF program, with FDI expected to rebound in 2025 and international reserves sufficient to meet declining external debt amortisations. On the fiscal side, financing needs remain high at 16% of GDP in 2025, supported by central bank loans and domestic banks, though this heightens the sovereign-bank nexus. Tunisia’s public finances remain vulnerable to external shocks and rigid expenditure structures, with subsidies, payroll, and interest consuming the bulk of revenues. Fitch noted that without deeper reforms, the country remains exposed to commodity price swings and currency depreciation, leaving long-term fiscal resilience uncertain despite near-term external improvements.
Oman and Qatar advances partnership to boost trade and investment. Oman and Qatar agreed to establish a joint technical committee to drive around USD1.7bn in trade and investment projects, following high-level talks in Doha on 13 September that highlighted opportunities across energy, logistics, mining, technology, and food security. The move comes after trade between the two Gulf neighbours surged nearly 20% in 2024 to exceed USD1.7bn, with both sides keen to turn momentum into concrete ventures. Oman showcased incentives in its 22 free and industrial zones, pitching itself as a regional production and export hub, while also promoting opportunities in fisheries, agriculture, renewables, tourism, and pharmaceuticals. Both governments emphasises private sector involvement as a strategic necessity to ensure that new projects translate into tangible economic outcomes.
