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 holds near six-month high as Iran deadline and military buildup raise supply concerns. Oil remained close to a six-month high, with Brent near USD72/b and WTI around USD67/b, as escalating US-Iran tensions and a tightening negotiation timeline supported a strong risk premium in price. President Trump said Iran has roughly 10-15 days to reach a nuclear deal, while the US continues a major military buildup in the Middle East, raising fears of potential strikes and disruptions to supply from a region that account for a significant share of global oil output. The main market concerns centres on the possibility of Iran blocking the Strait of Hormuz, a critical chokepoint for energy exports, which could sharply tighten global supply. Oil has climbed strongly this year as geopolitical risks overshadow earlier expectations of a market surplus, with recent data showing a 9-million-barrel drop in US crude inventories further reinforcing bullish sentiment.
Gold steadied near USD5,000 on geopolitical tensions and rate uncertainty. Gold held near USD5,000/oz after two days of gains as investors weighed escalating Middle East tensions, particularly the short deadline set by the US for a potential nuclear deal with Iran and the buildup of American forces in the region, which boosted safe-haven demand. The outlook for US interest rates also remained a key driver, with stronger economic data and more cautious signals from the Fed clouding expectations for rate cuts, typically supportive for non-yielding gold. Prices have been volatile since sharp correction from January’s record highs, driven partly by speculative trading, but underlying support factors, including geopolitical risks and a shift away from traditional assets, remain in place. Additional support may come from tighter supply expectations after major miner Newmont projected a roughly 10% drop in production this year.
MIDDLE EAST - CREDIT TRADING
End of day comment – 19 February 2026. Overall, a weaker day. The morning started on a stronger note with spreads 1/2 tighter. There were some big prints in long end ADGB and QATAR in the street with a combined 100mm of bonds clearing. It felt like that could clear the overhang especially in ADGB bonds, but selling resumed in the afternoon. With UST recovering post US number spreads widened out 1/2bp on average into the close for the main IG names like ADGB/QATAR and the respective quasi sovereign. What was weaker today was SHJGOV where bonds closed 0.25/0.75pt lower and the curve 5bp wider. The sukuk curve stayed bid though and closed broadly unchanged. OMAN was also offered in long end bonds and cleared around 0.5pt lower/+3bp. Primary markets will wait for the holiday week to come to an end and should reopen next week, meanwhile the market will remain driven by macro risk sentiment and Iran headlines.
MIDDLE EAST - MACRO / MARKETS
Egyption pound weakens on geopolitical tensions. The Egyptian pound fell to around 47.6 per dollar, marking its biggest intraday drop since June, as foreign selling intensified amid rising regional tensions and fears of a potential US strike on Iran, which also dragged sovereign hard-currency bonds lower and pushed the EGX30 down nearly 3%, reflecting a broader risk-off sentiment across Egyption assets. The pressure was largely externally driven and consistent with previous periods of geopolitical escalation rather than a reflection of domestic instability. In fact, Egypt’s macroeconomic fundamentals have been gradually improving, with record foreign-exchange reserves, moderating inflation from pat highs, tighter monetary policy, and continued IMF support helping stabilise investor confidence and anchor the currency after earlier episodes of sharp devaluation. The flexible exchange-rate regime and stronger foreign inflows from tourism, remittances, and portfolio investments have also contributed to relative FX market stability in recent months. Going forward, the pound is expected to remain sensitive to external shocks, capital flows, and regional risks, but improving macro stability suggest depreciation pressures may be more gradual rather than disorderly, unless geopolitical tensions escalate significantly.
India boosts Saudi oil imports amid pressure to cut Russian purchases. India is poised to import its largest volume of crude from Saudi Arabia in more than six years, with shipments expected to reach about 1-1.1mb/d this month, as sustained US pressure to curb Russian oil purchases reshapes its sourcing strategy. Although Russia may remain India’s biggest supplier if flows approach roughly 1.2mb/d, the gap between the two exporters is narrowing significantly after India has sharply increased discounted Russian imports following the 2022 Ukraine conflict. Looking ahead, Russian shipments to India are projected to decline further, potentially to 800,000-1mb/d, partly due to refinery maintenance at Nayara Energy and shifting geopolitical dynamics, which could further reduce Russia’s market share in a key growth market. For KSA, higher exports mark a chance to regain influence in India’s energy mix, as geopolitical pressures and trade dynamics continue to reshape global oil flows.
