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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 markets weigh EU sanctions on Russia and US trade outlook. Oil prices were steady after recording their first weekly decline in July, with Brent crude hovering near USD69/b and WTI above USD67/b. The market’s attention is fixed on progress in US trade negotiations, especially with the European Union, and the EU’s latest push to tighten sanctions on Russian energy exports. EU member states are preparing for potential trade tensions with the US ahead of an August 1 deadline and have agreed to a lower price cap on Russian crude, alongside new restrictions on petroleum products refined from Russian oil, added banking limitations, and a ban targeting a major Indian refinery and some Chinese entities. The effectiveness of the new price cap is uncertain without US backing, though the EU’s refinery produce ban is expected to tighten Western markets. Meanwhile, oil has gained since May, supported by Middle East volatility and supply adjustments, but remains down about 7% YTD due to easing OPEC+ curbs and broader trade uncertainties
Gold steady as markets weigh Fed signals and trade policy uncertainty. Gold steadied near USD3,350/oz as traders assessed mixed signals from Fed officials on the inflationary impact of President Trump’s tariff plans. While Fed governors Waller and Bowman showed openness to interest rate cuts, others remained cautious about persistent inflation risks. Trump continues to pressure Fed Chair Powell ahead of his term’s end in May, fueling uncertainty over future policy leadership. Markets are also watching for progress on US-EU trade talks, with the EU preparing for a potential no-deal scenario before Trump’s August 1 tariff deadline. Despite recent consolidation, gold remains over 25% higher this year, lifted by investor concerns over dollar assets
MIDDLE EAST - CREDIT TRADING
End of day comment – 18 July 2025. Another quiet trading day to end the week. The market remains strong overall. In IG sovereign mainly QATAR long end bonds changed hands, 49s closing +0.375pt/-3bp. ADGB was quiet throughout but marked 1/2bp tighter in the curve. In the higher beta credits OMAN squeezed higher today, the morning saw bids aggressively stepping up, up to 1pt in the long end and prices hovered around these highs with mainly 48s trading closing +1pt/-8bp. In financials new QNBK 4.5 30s saw some activity after a slow start, seen very little selling and a steady stream of retail inflows, in the street bonds cleared mainly between 99.375/99.45 which is around 20c higher than reoffer/-4bp. Corps saw activity in DPWDU, 33s were in demand but offer side liquidity was hard to find, closing +0.5pt/-5bp. ARADA announced today plans to issue 500mm Sukuks as early as next week.
MIDDLE EAST - MACRO / MARKETS
Egypt plans USD4bn bond issuance to address extended funding needs. Egypt is planning to issue up to USD4bn in international bonds over the next 12 months as part of efforts to diversify financing sources and meet about 40% of its estimated USD11bn external funding gap for the fiscal year ending June 2026. Instruments under consideration include dollar-and euro- denominated securities, sustainability bonds, yen- and yuan-denominated bonds, as well as sukuk. Finance Minister Ahmed Kouchouk said the remainder of the funding gap will be covered by concessional loans. The country is also continuing reforms aimed at resolving its foreign-currency shortage and attracting international capital, including pursuing re-entry to Euroclear settlement. Locally, Egypt is considering debuting pound-denominated sukuk and retail bonds to broaden domestic participation. Despite high debt and elevated borrowing costs, with dollar bonds yielding over 9%, Egypt remains attractive to investors due to its high real interest rates. Additional IMF disbursements of about USD2.4bn hinge on completing the combined fifth and sixth reviews of its USD8bn loan program. Egypt is focusing on fewer, high-impact asset sales, with deals planned this year in telecoms, airport management, and finance. Discussions are also ongoing with Kuwait and Qatar about converting deposits and advancing investment packages.
EU approves Strategic Partnership talks with Gulf nations amid trade tensions European Union member states have approved the start of negotiations for Strategic Partnership Agreements with the six Gulf Cooperation Council (GCC) countries as part of efforts to strengthen ties and reduce reliance on the US amid President Trump’s tariff threats. Talks will cover a wide range of issues including energy and security. The move builds on renewed momentum in EU-GCC engagement, following a recent EU-UAE agreement to begin free trade negotiations. The EU aims to deepen cooperation through these agreements, which can lay the groundwork for future trade deals after past attempts since 1990 failed to materialise.
