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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 lingers near multi-year lows amid ceasefire hopes and supply glut concerns. Oil prices hovered near their lowest levels since 2021 as markets weighed the prospect of a ceasefire in Ukraine that could ease restrictions on Russian crude into an already oversupplied global market. WTI traded around USD57/b, while Brent edged toward USD60/b, following comments from US President Trump suggesting progress toward ending the war after talks with Ukrainian and European leaders. Oil is on track for an annual decline as expectations of a growing surplus intensify, driven by OPEC+ restoring idled output and rising production elsewhere, with any potential easing of sanctions on Russia adding to downside risks. Despite reported progress in recent negotiations, significant political hurdles remain, while physical market indicators in the US and Middle East continue to signal weakening demand and persistent oversupply.
Gold pauses as investor await key US data and Fed signals. Gold retreated after five consecutive days of gains, with gold falling up to 0.6% to around USD4,280/oz, as investors booked profits ahead of a heavy state of US economic data that could clarify the Fed’s outlook for further rate cuts. Prices remain close to October’s record high, supported by expectations that lower interest rates, which tend to favour non-yielding assets like gold, may persist, even as Fed officials have delivered mixed signals on the policy path for 2026. Attention this week is on delayed US employment and inflation data following a prolonged government shutdown, alongside speeches from Fed policymakers. Despite the near-term pullback, gold is up more than 60% this year, underpinned by strong central-bank demand, investor diversification away from bonds and currencies, and steady inflows into gold-backed ETFs.
MIDDLE EAST - CREDIT TRADING
End of day comment – 15 December 2025. Another mixed day on subdued activity. Markets remain stuck in technicals as there isn't enough flow into year-end to clear them up. What was sold all last week (fins, AT1, new issues) is getting sold today and vice versa. In the morning the street tried to walk up cash prices with the UST recovery. But into the close with UST coming off the highs and equities struggling for direction we falling back again. Pockets of interest today were focused on sovgn IG bonds in the intermediate sector. ADGB had tighter prints in up to 2035s maturity. But that's where the strength ended. Long end bonds still feel plentiful available, newer issues still getting sold and also saw some selling today in quasi sovgn bonds. So on average prices are fluctuating around Friday’s close +/- 0.125pt with spreads on average 2/3bp wider. RM accounts today joined the clean up into year-end letting some bonds go. On the other hand ETFs remain balanced in net flows. We still have important macro numbers to come this week, but the path of least resistance now feels lower/ wider.
MIDDLE EAST - MACRO / MARKETS
IMF approves new disbursements as Jordan’s economic program stays on track. The IMF Executive Board completed the fourth review under Jordan’s Extended Fund Facility (EFF) and the first review under the Resilience and Sustainability Facility (RSF), unlocking immediate disbursements of about USD130 million under the EFF and US110 million under the RSF to support Jordan’s economic program. Jordan’s economy remains resilient despite regional headwinds, with growth accelerating to 2.7% in the first half of 2025 and inflation anchored near 2%, reflecting sound monetary policy and s table exchange rate peg. Fiscal performance remains aligned with program targets, supported by strong revenue collection and spending discipline, while public debt is set on downward path toward 80% of GDP by 2028. Structural reforms under the EFF and RSF are advancing, including measures to strengthen the business environment, labour markets, social protection, and resilience in the water, electricity, and health sectors, reinforcing medium-term growth perspective and balance of payments stability.
Israel’s November CPI signals further easing of inflationary pressure. Israel’s CPI for November confirmed a further easing in inflationary pressures, with headline inflation slowing to around 2.4% y/y in November from 2.5% y/y in October, firmly within the Bank of Israel (BoI)’s 1-3% target range, and marking one of the lowest readings in four years. One a month-on-month basis, prices were broadly flat to slightly lower, reflecting contained increase across most components and softer momentum in demand-sensitive categories. The moderation in inflation suggests that earlier price pressures have continued to unwind, supported by tighter financial conditions and weaker domestic demand amid ongoing geopolitical and economic uncertainty. This disinflationary trend strengthens the case for a more accommodative monetary policy stance going forward, giving the BoI greater flexibility to support economic activity while maintaining price stability.
