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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 holds steady as Greenland geopolitics clash with glut fears. Oil prices steadied as traders weighed market fallout from President Trump’s push to take control of Greenland against persistent concerns about a global supply surplus. Brent held near USD64/b and WTI stayed below USD60/b after a modest pullback, with Trump’s annexation drive unsettling markets, weakening the dollar, and raising fears of a damaging US-EU trade war. At the same time, crude remains under pressure from signs that supply is outpacing demand, including softer Middle East physical prices as OPEC+ boosts output and repeated warnings from the International Energy Agency of a major glut this year. Still, pockets of near-term tightness are offering some support, with disruptions at the Caspian Pipeline Consortium port and issues at Kazakhstan’s giant Tengiz field tightening Mediterranean-region supplies. Going forward, oil prices are likely to remain volatile as geopolitical risks compete with structurally bearish fundamentals from rising supply and a looming global surplus.
Gold steady near record as silver pulls back on Greenland trade-war fears. Gold held near a record high and silver retreated from its peak as markets reacted to President Trump’s intensifying push to take control of Greenland, stoking fears of a potential US-Europe trade war and boosting safe-haven demand. Gold traded near about USD4,670/oz, as Trump’s threats to impose tariffs on several European nations opposing the Greenland plan rattled the US dollar and prompted haven flow into precious metals amid heightened geopolitical uncertainty. European leaders are preparing emergency responses, including possible use of the EU’s anti-coercion tools, while the situation compounds existing market pressures linked to broader geopolitical and policy risks, contributing to the ongoing rally in gold and silver.
MIDDLE EAST - MACRO / MARKETS
Gulf stocks rise as Iran tensions ease, Saudi market lags on soft oil. Most Gulf stock markets closed higher yesterday as easing regional geopolitical tensions boosted investor sentiment, while Saudi Arabia benchmark index eased flat amid softer oil prices and profit taking. Signs that Iran’s crackdown has largely subdued protest, together with a softer tone from US President Trump on potential intervention, helped lift risk appetite across the region. Dubai’s main index advanced 0.4%, supported by gains in blue-chip names, while Abu’ Dhabi’s benchmark finished 0.5% higher. UAE equities extended last week’s rally, underpinned by optimism around the earnings season and expectations of sold corporate results, although oil price volatility remains a key risk. Qatar’s index gained 0.7% and Saudi Arabia’s benchmark concluded flat as traders awaited further fourth-quarter earnings release. Outside the Gulf, Egypt’s blue-chip index surged 2.5% to a record high, with broad-based gains across most sectors.
UAE and India seal mega partnership to boost trade, energy, and strategic ties. The United Arab Emirates and India have agreed to significantly deepen their strategic partnership, with Abu Dhabi committing to invest in a special investment hub in western India and both countries pledging to double bilateral trade to USD200bn by 2032. The two sides announces a “mega partnership” during talks between Prime Minster Narendra Modi and President Sheikh Mohamed bin Zayed Al Nahyan, which includes UAE investment in the Dholera Special Investment Region to develop an international airport, aircraft maintenance and refurbishment facilities, a pilot training school, and enhanced rail connectivity. The UAE will also supply India with 500,000 tonnes of Liquified Natural Gas annually for 10 years from 2028 under a USD2.5-3bn deal between ADNOC Gas and Hindustan Petroleum, making India ADNOC’s largest gas customer and strengthening long-term energy security. In addition, the leaders agreed to expand cooperation in defence, including joint weapons production and closet military ties, as well as in emerging areas such as artificial intelligence, digital payments, and financial services, with UAE firms setting up operations in India’s GIFT City. The two sides also discussed regional geopolitical developments, including Gaza, Yemen, and Iran, underscoring the growing strategic alignment between India and UAE amid rising global uncertainty.
IMF: World Economic Outlook Update. The IMF’s updated World Economic Outlook (WEO) expect the Middle East and Central Asia to continue strengthening over the next two years, with regional growth projected to rise from 3.7% in 2025 to 3.9% in 2026 and 4.0% in 2027, driven by a combination of higher oil output, resilient local demand, and ongoing economic reforms. Energy markets provide a supportive backdrop as oil prices are expected to remain relatively low but stabilised by OPEC+ efforts to avoid a price collapse while natural gas prices are likely to stay contained due to ample supply. Saudi Arabia is expected to lead regional performance with growth forecast at 4.5% in 2026 before easing to 3.6% in 2027 reflecting both higher oil production and continued expansion in non-oil sectors under Vision driven reforms. Overall, the outlook points to sold and improving growth across the Middle East although risks remain from potential geopolitical tensions which could disrupt trade routes supply chains and commodity markets.
