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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 rebounds as diesel tightness offsets trade-war jitters. Oil prices inched higher after a three-day slide, with Brent moving toward USD69/b and WTI near USD67/b, as traders parsed mixed US inventory data showing a build in distillates but a draw in nationwide crude. Market focus remained on President Trump’s tariff plans, after he announced letters would be sent to over 150 countries outlining potential duties of 10%-15%, while also dismissing speculation about removing Fed Chair Powell. Despite broader fears of a supply glut later this year as OPEC+ ramps up production and summer demand wanes, near-term signals remain supportive. US distillate inventories are at their lowest seasonal level since 1996, and refining margins have improved, with the gasoil to Brent spread for September climbing around 7% this month. In the Middle East, drone attacks struck oil fields in Iraq’s Kurdistan region, but the area has not exported crude for over two years, limiting market disruption.
Gold holds ground as markets weigh Fed Chair uncertainty. Gold steadies below USD3,350/oz after a volatile session triggered by speculation that President Trump might remove Fed Chair Powell. While President Trump later said he had no plans to take action, the initial reports sparked a surge in gold and declines in US stocks, the dollar, and treasury yields. Although markets calmed after the president’s remarks, uncertainty remains over possible political interference in the Fed. Any move to oust Powell before his term ends in 2026 could undermine central bank independence and further lift demand for safe-haven assets. Gold remains up nearly 30% this year, supported by trade tensions, geopolitical risks, and sustained buying from central banks and ETFs.
MIDDLE EAST - CREDIT TRADING
End of day comment – 16 July 2025. All the action came at end of day with the headlines around Powell getting possibly fired by Trump. Maybe that explains too the UST weakness from yesterday post CPI, at least a bit. UST seeing a sizeable steepening into the close and on the back of it we are seeing some selling in long end bonds. But as I type the curve is flattening again as Trump just claimed he is not planning to fire Powell. The good news, middle east closed about unchanged with spreads in a -2/+2bp range at eod. long end bonds are particularly strong in IG sovereign, led by Qatar and here with a strong bid in QATAR 49s closing +0.125pt/-2bp. It is a bit another story in Quasis were the market has been selling long end ADNOCM, ADGABU and QPETRO, ADNOCM 54s closing -0.375pt/+2bp. In higher beta OMAN had again a strong bid in long end, interrupted by the Trump news, closing OMAN 51s unch/-2bp.
MIDDLE EAST - MACRO / MARKETS
Bahrain pledged USD17bn investment in the US during Crown Prince’s visit. Bahrain’s Crown Prince Salman bin Hamad Al Khalifa announced plans to invest USD17bn in the US during a meeting with President Trump at the White House, highlighting growing economic and strategic ties between the two nations. While specific deals were not disclosed, the pledge may include Gulf Air’s potential order of Boeing 787 Dreamliner jets. The visit reflects Trump’s continued efforts to attract foreign investment to bolster US manufacturing and trade, as well as to deepen relationships with Gulf allies. The meeting also covered regional security and trade issues, with Bahrain playing a key role as host to US military forces in the Middle East. The discussions come amid heightened tensions with Iran and follow on from earlier diplomatic moves such as Abraham Accords.
Drone strikes force major oil output cuts in Iraq’s Kurdistan region. Drone attacks on oilfields in Iraq’s semi-autonomous Kurdistan region have halted production at multiple sites, cutting regional output by ~150,0000b/d from a pre-attack level of roughly 285,000b/d. The oil production in this region has not been exported since March 2023, when pipeline flows to Turkey were suspended and, there has been no significant impact on global oil prices, as the region’s output is not part of international supply flows. Gulf Keystone Petroleum, DNO, HKN Energy, and others reported halts at major facilities, with assessments ongoing to determine the extent of the impact. Despite the disruption, there has been no noticeable effect on global oil prices, as the output from the region is not part of international trade flows. The Association of the Petroleum Industry of Kurdistan (APIKUR) has called on both federal and regional authorities to enhance safety and security at oil installations to prevent further disruptions.
