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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 prices ease as Russia’s port resumes operations. Oil prices fell after signs that operations had restarted at Russia’s Novorossiysk port on the Black Sea, which had been partially shut following a Ukraine strike last week. Brent dipped below USD64/b, while WTI retreated toward USD59/b. Two tankers docked at Novorossiysk on Sunday, suggesting the terminals were back in action, and crude loading had resumed. The earlier attack, combined with Iran’s seizure of a tanker near the Strait of Hormuz, briefly added a geopolitical premium to prices at a time when the market is already grappling with a growing supply surplus. Output is rising across OPEC+ and other producers, though China and India are still absorbing some Russian barrels constrained by US sanctions. Refining margins have also jumped due to persistent strikes on Russian energy sites, unplanned outages in Asia and Africa and permanent capacity reductions in Europe and the US, tightening supplies of diesel and gasoline.
Gold pauses after Fed rate-cut hopes cool. Gold was little changed just below USD4,100/oz today after two days of decline, as investors reassessed the odds of a December Fed rate cuts that had largely been priced in only weeks ago. Softer expectations for looser policy followed cautious comments from Fed officials, while the six-week US government shutdown has delayed key labour and inflation data, leaving policymakers more reluctant to commit to another move. Market pricing now shows traders split on the changes of a December cut, reducing support for non-yielding gold in the near term. Even so, gold remains about 55% higher YTD and on track for its best year since 1979, with the earlier surge to a record above USD4,380/oz driven by sustained central-bank buying and strong investor demand for previous metals as a hedge against mounting fiscal risks in major economies.
MIDDLE EAST - CREDIT TRADING
End of day comment – 14 November 2025. Mixed day on a typical slow MENA Friday. The market in the morning was a bit spooked about the macro risk off overnight and the UST move lower on reduced dec rate cut bets. That led to a slew of selling in new and newer issues. But these flows ebbed in a good hour and for the rest of day it was relatively quiet. If you look at spreads you are still at the mercy of UST moves as the market widened with the spike higher in UST prices around London midday. But yields moved higher again in the afternoon whilst flows remained light. With cash prices generically 0.125/0.375pt lower the spread change distribution is anywhere from unch to -2bp. New issues saw a bit of selling in the fins space. New BOSUH 30s closed -0.25pt/+5bp. New DIBUH 30s -0.10pt/+2bp. New FABUH EUR traded in a 99.75/875 range (-0.125pt/+1bp). Trading in sovereign bonds was on the lighter side, but despite the steepening move in UST yields the selling on the back of higher yields mostly affects the belly of the curve like in ADGB where every bond until 2035 seems to be available but long end bonds remain well bid on very little selling.
MIDDLE EAST - MACRO / MARKETS
Israel posts sharp Q3 rebound as markets rally on easing security risks. Israel’s economy surged 12.4% in Q3, supported by a 36.9% jump in fixed investment, strong export and consumption growth, and higher government spending. Despite the stellar quarter, authorities cut 2025 growth forecasts to around 2.5-2.8% due to the economic drag from the September Gaza operation and prolonged mobilisation of reservists, the mid-October ceasefire with Hamas, paired with the next steps of Trump’s 20-point peace plan, has helped stabilise sentiment even as officials warn that full demilitarisation of Gaza could still prove challenging. Financial markets have strengthened markedly, with the TA-25 up 51.5% y/y, the shekel gaining 16% over two years, and CDS spreads halving from Iran-war highs, reflecting investors’ confidence that immediate security risks have eased. Going forward, Israel’s outlook will hinge on the durability of the ceasefire, clarity on post-conflict governance in Gaza, and the pace at which reserve soldiers return to the civilian workforce.
Growth supported by oil, but fiscal pressures persist in Libya. IMF staff recently concluded visit to Libya. Libya’s 2025 GDP growth is benefitting from higher oil production, yet lower global oil prices and persistently high public spending continue to drive large fiscal and current account deficits. Deep political divisions have stalled the adoption of a unified budget, resulting in uncontrolled expenditures that strain the exchanged rate, widen the gap between official and parallel rates, and pressure central bank reserves, despite reserves remaining comfortable and inflation low. While the Central Bank of Libya has taken steps to regulate the foreign exchange market and absorb excess liquidity, the core challenge remains the lack of spending discipline. The IMF stresses the urgent need for a unified budget, comprehensive spending reforms, transparent investment planning, and subsidy restructuring, noting that maintaining central bank independence is crucial for financial stability amid heightened economic uncertainty and downside risks.
