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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 steadies as US-Iran talks ease risk premium amid geopolitical tensions. Oil steadied after falling nearly 2% as positive US-Iran nuclear talks reduced geopolitical risk premium, with Brent trading above USD67/b and WTI near U SD62/b. Iran said a “general agreement” had been reached on the framework of a potential deal, while US officials indicated further proposals would follow in two weeks. The diplomatic progress comes despite heightened military activity, including Iranian drills in the Strait of Hormuz and the deployment of a second US aircraft carrier. Oil has risen this year on geopolitical tensions, though concerns about global supply glut persist. Markets are also monitoring US-brokered Ukraine-Russia talks, as any easing of sanctions on Russia could increase global oil supplies. Trading volumes were subdued amid Lunar New Year holidays across parts of Asia.
Gold rebounds above USD4,900 as dip buyers return ahead of Fed minutes. Gold climbed back above USD4,900/oz as investor bought the dip following a two-day decline of more than 3%, with trading volumes this due to Lunar New Year holidays in much of Asia. The earlier drop was driven by a stronger US dollar, while attention now turns to the release of minutes from the Fed’s latest meeting for clues on the interest rate outlook. Gold recently retreated sharply from a record high above USD5,595/oz after speculative buying overheated the market, briefly plunging to near USD4,400/oz before recovering about half its losses in volatile trading. Longer term, major banks continue to expect renewed gains, citing persistent geopolitical tensions, concerns about the Fed’s independence, and investor diversification away from sovereign bonds and currencies. In the near term, expectations around rate cuts remain key, a lower borrowing costs would support non-yielding assets like gold.
MIDDLE EAST - CREDIT TRADING
End of day comment – 17 February 2026. Like we mentioned in my previous comment, after a big UST rally and spread widening it takes 2/3 days for spreads to normalise and today was such a day. It has been a feature of this market that the spread vol is higher than the yield vol or otherwise put, the UST yield vol is higher than GCC bond yields...from the start dealers and accounts were looking to buy bonds despite the weaker risk sentiment, and then once UST retreated in the afternoon spreads grinded in. The steepening of the UST curve led to short end and belly bonds outperforming long end bonds in spread terms. Closing cash prices anywhere from +0.10pt/+0.5pt and spreads anywhere from -2bp/-5bp. One of the strongest credits is still SHARSK with buyers in 35s/36s closing +0.375pt/-5bp. Not weaker but with offers on the way up was ADGB long end where 54s closed +0.375pt/-2bp. Primary markets didn't see any announcements of new issues in my universe, you'd think after the Lunar New Year holiday/half term/ carnival issuers will take advantage of lower yield levels.
MIDDLE EAST - MACRO / MARKETS
Egypt growth accelerates to 5.2% in Q2 2025, boosted by industry and tourism. Egypt’s economic expanded by 5.3% in the second quarter of FY2025-2026, the strongest performance since Q3 FY2021/2022, with full-year growth now expected to reach 5.2%, exceeding the initial 4.5% target. The acceleration reflects the continued implementation of structural, fiscal and monetary reforms that have strengthened macroeconomic stability and improved resilience to external shocks. The expansion supported labour market gains, with unemployment falling to 6.2% as female employment rose to 21.7%, although male employment eased slightly to 70.8%. growth was broad-based, led by the non-petroleum industrial sector, which expanded 9.6% and contributed 1.2ppts to overall growth amid stronger export performance and industrial localisation efforts. Tourism remained a key driver, with restaurants and hotels growing 14.6% as Egypt welcomed a record 19 million visitors in 2025. The Suez Cana recorded 24.2% growth, signalling a partial recovery alongside improving Red Sea stability, while banking and insurance grew 10.7% and 12.9% respectively, reinforcing financial inclusion and supporting overall economic momentum.
GCC banks assets near USD4 trillion as liquidity and profits rise. Commercial bank assets across the GCC surpasses USD3.9 trillion at the end of 2025, marking an 11.9% annual increase, while deposits rose 10.6% to USD2.3 trillion and central banks’ net foreign assets climbed 10.5% to USD842bn, underscoring robust liquidity and financial stability in the region. The data, presented at the Committee of Central Bank of Governors in Bahrain, comes alongside record profitability, with listed Gulf banks posting a combined USD16.6bn in net income in the Q3 2025, up 11.6% y/y and reflecting improved credit conditions. Al-Budaiwi highlighted that the bloc’s resilient banking performance amid global political and economic volatility demonstrates the strength of its fiscal and monetary frameworks, while emphasising the need for continued policy coordination and integration among member states to enhance responsiveness to global shocks and sustained long-term economic stability.
