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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 held steady as Iran tensions ease and markets turn risk-off on Greenland rhetoric. Oil prices steadied as geopolitical pressure from Iran eased and boarder markets adopted a risk-off tone following President Trump’s renewed push over Greenland. Brent traded near USD64/b and WTI above USD59/b after the weekend passes without a further escalation in Iran, easing fears of supply disruptions from the OPEC producers, even as US forces continued to bolster their regional presence. Sentiment was weighed down by concerns over Trump’s Greenland gambit and the possibility of tariffs on some European nations, which pushed equities lower and lifted gold to a record. Structurally, crude remains under pressure from expectations that supply will outpace demand this year, with the International Energy Agency projecting a surplus of 3.8mb/d, although pockets of tightness persist, including shortages from Kazakhstan due to Black Sea disruptions, supporting near-term time spreads.
Gold and silver surge to record highs on Greenland-tariff risk. Gold and silver prices climbed to record highs as US President Trump’s intensifying push to impose tariffs on European countries over his plan to acquire Greenland fuelled fears of a broader US-Europe trade conflict, driving investors toward safe haven assets amid risk-off market conditions. Gold traded near all-time peaks around USD4,6660/oz, and silver rose sharply, up more than 4% and touching fresh highs, after Trump said he would levy 10% tariffs on goods from eight European nations starting 1 February, rising to 25% in June if no agreement is reached, raising concerns about trade disruption and geopolitical instability. The escalation weighed on the US dollar and equities, while boosting demand for gold and other havens amid broader uncertainty over trade relations and monetary policy.
MIDDLE EAST - CREDIT TRADING
End of day comment – 16 January 2026. What looked like a quiet Friday with spreads inching tighter ended in some bigger macro risk moves post Trumps Hassett comments. Whilst the full extent on market/risk pricing might still be ahead of us, we saw an initial move flatter in UST, Swap spreads tighter and USD stronger. Flows also turned in my GCC universe with a bit of a 'sell first, ask questions later' reaction. Cash prices moved to the left in the last hour and spreads closed anywhere from unch to -2bp. That is some 2bp off the morning tights. Overall there is still a constructive tone though, long end bonds now have a good bid again, take UAE 41s/52 closing -0.125pt/unch. Then new issues are holding well or even continue to perform, DHAENE 53s squeezed another 0.375pt higher today (-5bp) and I haven't seen any sellers of newer issue in the afternoon which would normally be the first reaction in a risk off mood. That said ever tighter spreads in the belly might get tested by sellers and we are starting to see more 3/8y bonds trading, ADNOCM 34s closed -0.125pt/-1bp. On the primary market side no new issue announcement in my universe.
MIDDLE EAST - MACRO / MARKETS
Fitch affirms Saudi Arabia at ‘A+’ with stable outlook. Fitch rating affirmed Saudi Arabia rating at ‘A+’ with a stable outlook, reflecting the Kingdom’s strong fiscal and external balance sheets, sizable reserves, and large sovereign net foreign assets, which remain well above peer medians despite rising borrowing. Fitch projects reserves at 11.6 months of external payments in 2026 and expects the current account deficit to widen to 4.3% of GDP before narrowing in 2027 as oil export volumes rise and tourism inflows increase. The fiscal deficit is forecast to narrow to 3.6% of GDP by 2027 as higher oil production offsets lower prices and non-oil revenues benefit from strong activity and improved collection, although government debt is set to se to about 36% of expected at a solid 4.8% in 2026, driven by higher oil output and resilient non-oil activity supported by Vision 2030 reforms, high investment, and consumer spending, while the banking sector remains well-capitalised, profitable, and resilience with non-performing loans.
Libya devalues Dinar to shore up stability. Libya’s Central Bank has adjusted the official exchange rate of the dinar following its first board meeting of 2026, citing mounting pressures from ongoing political divisions, weaker international economic conditions, lower oil prices, and declining oil export revenues. The move is aimed at preserving macro-financial stability, meeting the state’s growing financial commitments, and supporting economic and monetary reforms while safeguarding public revenue sustainability. The revised rate sets a buy price of LYD6.3648/USD and a sell price of LYD6.3967/USD, compared with an offshore market rate of about LYD5.43/USD in mid-January. In parallel, Libya signed a partnership with Qatari, Italian and Swiss companies to expand and develop the Misrata Free Zone port terminal in a USD2.7bn FDI project expected to boost capacity to 4 million containers annually and generate around USD600 million in operating revenue, reinforcing the country’s largest commercial port, which handles roughly 60% of Libya’s non-oil trade.
