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 stabilises as US pause Iran strike plans, easing geopolitical risk premium. Oil prices steadied after biggest six-day slide since June as markets reacted to signs the US may hold off on attacking Iran amid ongoing nationwide protests, easing some geopolitical risk premia built into crude valuations. Brent traded near USD64/b and WTI hovered around USD59/b after sharp losses following news that President Trump would delay military action, reportedly at the urging of Benjamin Netanyahu, which reduced the immediate likelihood of disruptions to Iranian oil output or shipping lanes. Despite this, US is still bolstering its military presence in the region. Prices had risen earlier in the week on concerns about possible conflict in Iran and turmoil in Venezuela, and continue to reflect a complex backdrop of geopolitical volatility, supply disruption risks, such as sanctioned tanker seizures and shifts in Venezuelan exports, and fundamental factors like rising US crude inventories.
Silver dips on tariff pause but posts strong weekly gain on haven demand. Silver fell as much as 3.1% today after the US held off on imposing import tariffs on critical minerals, but the metal still ended the week up more than 13% amid strong demand for precious metals. While President Trump stopped short of levies on minerals such as silver and platinum, the pause appears to be only a brief interruption to a rally that has seen silver triple over the past year and climb more than 25% so far this year. Prices continue to be supported by a broader rotation into commodities as part of the “debasement trade”. Driven by concerns over rising debt, aggressive US foreign policy, and renewed pressure on the Fed that has boosted haven demand for gold and silver. Elevated prices are encouraging recycling, but limited high-grade refining capacity is slowing the return of scrap to the market, helping to keep supply tight.
MIDDLE EAST - CREDIT TRADING
End of day comment – 15 January 2026. Stronger day overall. Geopolitical risks related to Iran receded overnight and TSMC results brought the AI trade back providing for risk sentiment to improve materially. However flows remained somewhat mixed and whilst bids certainly stepped up, no one is chasing cash. Spreads tightened 2-7bp, especially short end and belly bonds are benefitting from a yield bid which seems to be inelastic to UST weakness/ flattening. The long end was the only part of the curve higher in cash price term. Especially ADGB 54s remained bid closing +0.375pt/-4bp, Qatar lagged a bit with 48s closing +0.125pt/-2bp. In higher beta names OMAN staged a comeback in long end with bonds closing +0.625pt/-7bp. The quasi space saw renewed interest in new DHAENE 53s outright and against ADGB 50s, closing +0.25pt/-4bp but away from that most cash prices remained unchanged and spreads moved 3-5bp tighter reflecting mostly UST moves. In primary markets QNBK priced a 650mm 5y Formosa FRN at SOFR+80bp.
MIDDLE EAST - MACRO / MARKETS
IMF backs Oman’s reform momentum, sees stronger growth and resilient economy. The IMF concluded its Article IV Consultation and Financial Sector Assessment for Oman, endorsing the country’s reform progress and resilient outlook under Vision 2040. Growth reached 1.6% in 2024 and accelerated to 2.3% y/y in the first half of 2025, driven by a robust non-hydrocarbon sector (3.5% growth) spanning construction, agriculture and fishing, tourism, and logistics, while inflation remained subdued at 0.9%. Prudent fiscal management kept the budget in surplus (0.7% of GDP in 2025) despite softer oil prices, narrowed the non-hydrocarbon primary deficit, and held government debt at 36.1% of GDP. The current account is estimated to have slipped into a modest 1.1% of GDP deficit. The FSAP found banks sound, well- capitalised, liquid, and profitable. While near-term risks tilt to the downside from trade tensions and regional geopolitics, the IMF expects medium-term growth to strengthen as oil output returns to capacity and large-scale investment roll out, and urged continued reform momentum and accelerating structural reforms to diversify the economy, and enhance the business environment.
Israel inflation rose from 2.4% y/y in November to 2.6% y/y in December. Israel’s annual inflation rose to 2.6% in 2025, remaining within the government’s 1%-3% target range and marking a moderation from 3.2% in 2024, according to the Central Bureau of Statistics. Inflation accelerated slightly toward year-end, up from 2.4% in November, while the December consumer price index was unchanged m/m. price increases were led by clothes (+1%) and housing and transportation (+0.7 each), and overseas travel (+4.1%). Housing pressures are building, with the housing price index up 0.7%, rents on renewed contracts up 3%, and rents for new tenants jumping 4.6%. these were partly offset by declines in entertainment and culture (-2.6%) and furniture and home equipment (-0.6%). Going forward, rising housing and rental costs are likely to keep inflation pressures tilted upward, with CPI expected to remain within the target range but closet to the upper bound in the coming months.
