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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 steady as US crude stocks plunge. Oil prices held gains after US crude inventories posted their steepest drop since mid-June, falling by 6 million barrels last week, according to the Energy Information Administration. Brent hovered near USD67/b and WTI around USD63/b, while gasoline stockpiles fell for a fifth consecutive week, keeping overall US inventories below seasonal averages. However, broader market sentiment remains cautious. Oil is still down more than 10% this year as concerns about US trade policies and the return of OPEC+ supply stoke fears of oversupply once peak summer demand fades. Looking ahead, traders are closely monitoring the balance between sustained inventory drawdowns and the return of idles OPEC+ production, while geopolitical uncertainty and shifting trade policies underscore the risk of renewed downward pressure on prices.
Gold strengthens as Fed independence concerns lift haven demand. Gold prices held firm above USD3,342/oz after rising nearly 1%, supported by renewed safe-haven interest following President Trump’s call for Fed Governor Lisa Cook to resign over a mortgage fraud allegation. While Cook has indicated she intends to remain in her post, her potential departure would allow rump to nominate a more dovish policymaker, fuelling market speculation about the Fed’s independence. Looking ahead, traders are focused on Fed Chair Powell’s upcoming keynote at the Jackson Hole Symposium for signals on monetary policy direction, with expectations building for at least a 25bps rate cut next month, a move that would be favourable for non-yielding assets like gold. The latest Fed minutes highlighted inflation risks as the dominant concerns over labour market weakness, reinforcing the cast for easing. Gold has already gained more than 25% this year, with central bank purchases and inflow into ETFs underpinning demand.
MIDDLE EAST - CREDIT TRADING
End of day comment – 20 August 2025. Another softer day overall. Client activity was balanced overall but the street continued to lean on bonds. In IG names we close 2-4bp wider. QATAR long end remained active, today mostly in 49s which closed -0.125pt/+2bp. ADGB was quieter but also with better sellers in long end, 54s closing -0.125pt/+2bp. Quasi sovereign had activity in ADNOCM/ADQABU with sellers across both curves, depending were you look at bonds closed -0.125pt/-0.25pt and 2/4bp wider. In higher betas OMAN long end found some bids, but at lower levels as well, closing 47s -0.25pt/+3bp. Financials are still the area of strength given their short duration and the general steepening trend, most issues closing unchanged in px with very little selling. In corps starting to see some weakness in DPWDU, today 35s were for sale closing -0.25pt/+5bp. risk sentiment has shifted somewhat in the last 2 sessions, the widening though is very orderly and the flows still by and large remain balanced. In the scheme of the summer tightening, the widening move is small and once we are over Jackson Hole the real test will come if and when new issuance come.
MIDDLE EAST - MACRO / MARKETS
Oman posts USD673 million budget deficit in Q2. Oman posted a budget deficit of OMR259 million (USD673 million) in Q2 2025, reversing a surplus recorded a year earlier, as weaker hydrocarbon income and rising public expenditure weighed on fiscal performance. Total revenue dropped 6% y/y, with oil receipts down 10% to OMR3bn and gas revenue sliding 6% to OMR884 million, though non-oil income edged up by 2%. At the same time, spending rose 5%, led by a 37% increase in development outlays to OMR688 million, alongside higher allocations for electricity, fuel, and social protection subsidies. Despite the deficit, public debt eased to OMR14.1bn, down from OMR14.4bn a year ago, reflecting continued debt management efforts. Looking ahead, the Ministry of Finance expects a full-year deficit of about USD1.6bn (18% of GDP), underlining the challenge of balancing fiscal consolidation with the need to sustain investment and economic diversification amid volatile oil revenues.
MENA M&A momentum hits record high in H1 2025. According to the latest EY MENA M&A Insights report, mergers and acquisitions in the Middle East and North Africa surged in the first half of 2025, with deal value rising 19% y/y to USD58.7bn and transactions up 31% to 425, marking one of the busiest half year periods on record. Complementing this, the London Stock Exchange Group reported USD155.5bn in M&A activity, the highest first-half total since 1980, highlighting the region’s growing global prominence. The UAE and Saudi Arabia led the way, supported by sovereign wealth funds and government-related entities, with chemicals and technology dominating cross-border and domestic transactions. Cross-border activity reached its highest level in five years, while inbound and outbound flows both saw sharp increases, underscoring international confidence in the region. With regulatory reforms, diversification strategies, and sovereign wealth fund backing, MENA’s M&A market is experiencing a structural upswing, positioning it for continued growth in technology, chemicals, and energy transition sectors.
