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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 extends losses as global surplus builds ahead of US-China trade talks. Oil prices continued to slide, with Brent falling below USD61/b and WTI near USD57/b, as growing signs of a global supply glut weighed on sentiment. Data from Vortexa showed that crude volumes on tankers reached a record 1.24bn barrels in the week to October 17, underscoring persistent oversupply amid weakening demand growth. The International Energy Agency expects the surplus to reach record levels next year as OPEC+ and non-member producers ramp up output, pushing futures toward a third consecutive monthly decline and widening time spreads that signal abundant supply. Meanwhile, markets are watching for potential signals from upcoming US-China trade talks in Malaysia, ahead of a planned meeting between Presidents Trump and XI later this month.
Gold holds near record as investors weigh trade and policy development. Gold hovered near a record high of USD4,381.52/oz after surging 3.1% on Monday, supported by strong safe-haven demand even as optimism grew over easing US-China trade tensions and a potential end to the US government shutdown. Despite signs the rally may be overextended, with technical indicators showing overbought conditions, investor appetite for gold remains robust. President Trump reaffirmed plans to meet China’s Xi Jinping next week, while maintaining tariff threats if no deal is reached by November 1. Meanwhile, hopes of a US government reopening further buoyed sentiment. Gold has gained more than 65% so far in 2025, its ninth consecutive weekly advance, driven by central-bank buying, ETF inflows, and demand for havens amid economic uncertainty and concerns over the Fed’s independence.
MIDDLE EAST - CREDIT TRADING
End of day comment – 20 October 2025. Strong day, market is going out at the highs. However there is a bit the feeling that the market is stuck. ETFs have inflows but asking for offers in bonds the market doesn't have. Dealers on the other hand are still reducing positions but in bonds no one has a good bid in. So requests are getting repetitive. Flows picked up a touch compared to last week but still are running well below a usual day. All said, macro markets are supportive of risk and the outperformance of long end bonds continue. ADGB long end was led by 51s closing +0.5pt/-3bp. QATAR didn't traded much but closed similarly strong. Higher beta credits also started to outperform around midday. MOROC closed 3/4bp tighter led by 50s (+0.625pt/-4bp). OMAN caught a late afternoon bid in long end led by 48s closing +0.5pt/-3bp. Dealers are trying to sell recent new issues in fins, new DHBKQD 31s for example remains nearly 1pt lower and 20bp wider from its reoffer level without attracting any interest. Then there are still some sellers in Quasi sovereign 5y area bonds like ADQABU 30s or ADGLXY 34s which just managed to go out unchanged today.
MIDDLE EAST - MACRO / MARKETS
IMF sees MENA region showing resilience, calls for reforms to sustain growth. In his press briefing, Jihad Azour, Director of the IMF’s Middle East department, highlighted that the MENA region is projected to grow by 3.2% in 2025, up from 2.1% in 2024. He explained that oil exporters are benefitting from increased output and stable energy prices, while oil importers are supported by lower import costs, robust remittances, and a sustained rebound in tourism. Azour emphasised that this rebound shows the region’s resilience amid multiple global challenges, including slower global growth, tighter financial conditions, and geopolitical uncertainties. However, he cautioned that persistent inflation, high debt levels, and fiscal vulnerabilities could weigh on the outlook if not addressed. He called on regional policymakers to rebuild fiscal buffers, enhance monetary policy credibility, and accelerate structural reforms aimed at boosting diversification, private sector participation, and job creation, especially for youth and women. Azour added that stronger governance, improved business environment, and regional cooperation will be essential to sustain the region’s momentum and achieve inclusive, long-term prosperity.
Inflation edges higher in Oman and Qatar in September. CPI in both Oman and Qatar picked up modestly in September 2025, reflecting a gradual rise in regional inflationary pressures. Oman’s annual inflation accelerated to 1.1% y/y, up from 0.5% y/y in August, driven mainly by higher housing, utilities, and food prices amid ongoing adjustments in domestic costs. Similarly, Qatar’s inflation rose to 1.15% y/y, compared with 0.73% y/y a month earlier, supported by increases in transport and recreation costs as well as stronger consumer demand. Despite these upticks, inflation in both economies remains comfortably contained, allowing monetary policy to stay supportive of growth while maintaining price stability. Going forward, inflationary trends will likely remain influenced by global food prices, domestic fuel adjustments, and steady demand recovery across the Gulf region.
