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 market steady as US criticism targets Indian purchases of Russian crude. Oil prices held steady, with Brent trading just under USD68/b and WTI above USD63/b, as markets weighed the outlook for Russian crude flows to India amid escalating US trade tensions/ White House trade adviser Peter Navarro renewed criticism of India for continuing to import Russian oil, reiterating that US tariffs on Indian goods will double to 50% on August 27, with half of the increase linked to those purchases. Despite the pressure, Indian refiners have resumed buying Russian crude after a short pause, while Russia signalled that flows would continue. The Trump administration has framed India’s imports as profit-driven rather than supply-driven, accusing its oil industry of fuelling the trade. Oil remains lower on the year overall, pressured by concerns over demand stemming from Trump’s trade policies and rising OPEC+ production.
Gold steady ahead of Fed symposium. Gold traded around USD3,335/oz, little changed on the week, as traders pared back expectations for imminent Fed rate cuts after strong US manufacturing data showed factories expanding at the fastest pace in more than three years. The data reinforced concerns that inflation pressures remain elevated, with money markets now pricing in a 73% change of a September cut, down from over 90% a week earlier. Attention is focused on Fed Chair Powell’s speech at Jackson Hole on today, where investors will seek guidance on the policy path, while several Fed officials, including Cleveland Fed President Beth Hammack, signalled caution against easing too soon. Despite near-term uncertainty, gold remains more than 25% higher YTD, supported by April’s record high, sustained central bank purchases, ETF flows, and geopolitical tensions, though it has largely traded within a narrow range in recent months.
MIDDLE EAST - CREDIT TRADING
End of day comment – 21 August 2025. Spreads are overall tighter today, on average by 2/3bp, but the market feels weaker. Volumes remain very light, but ETF outflows today have been joined by some RM sellers. The shorts and yield buyers still provide support though, so price/spread moves remain very orderly and gradual. QATAR long end was most active within the IG space again led by 49s closing -0.375pt/-2bp. ADGB didn't see many bonds going through but also had outflows mainly in long end and here in 47s closing -0.375pt/-2bp. In higher beta sovgn OMAN is slowly coming out but the curve still has support from short covering, 51s closing -0.5pt/-1bp. Financial bonds had a quiet day and prices remain very sticky with again selective buyers today in DIBUH and again FABUH, spreads looking 3/5bp tighter with cash prices unchanged. Corps closing 0.125/0.25pt lower, but here as well some shorts like in DPWDU 37s are trying to cover lending some support to the overall curve. The risk off mood of the last two days was met today by higher yields in DM rates on better economic data. Tomorrows Powell speech will set the tone and given tight spreads the overall market is getting more price sensitive to UST/Bund yield moves, so I would expect higher yields leading to more outflows and vice versa as an initial reaction.
MIDDLE EAST - MACRO / MARKETS
Egypt reaffirms monetary policy continuity with Central Bank Governor’s reappointment. Egypt’s President has once again extended Hassan Abdalla’s term as Acting Governor of the Central Bank of Egypt (CBE) by one year. This marks fourth consecutive year in the role since his initial appointment in August 2022. In their recent meeting, both leaders emphasised the need to bolster Egypt’s foreign currency reserves, support essential commodity imports, and maintain a unified, flexible exchange rate system aiming at preserving macroeconomic stability. Abdalla’s continued leadership underscores the administration’s confidence in his inflation-managing policies and the steady progress made under his watch, laying a foundation for potential interest rate adjustments in the forthcoming Monetary Policy Committee meeting scheduled for August 28. Going forward, his tenure will be closely watched for the balance he strikes between tightening measures to anchor price stability and easing policies to stimulate growth amid persistent external financing needs.
Kuwait’s inflation modestly rises to 2.39% in July. Inflation in Kuwait slightly went up from 2.32% y/y in June to 2.39% y/y to July. The increase was driven largely by the food and beverages category, which climbed approximately 5.11% y/y. Other notable contributors included miscellaneous goods and services, housing, and health services, while transportation costs declined by 1.81%. compare to broader averages, Kuwait’s inflation remains relatively moderate, tracking slightly below the IMF’s projected 2.5% for 2025. Kuwait is also accelerating economic transformation under Vision 2035, linking internal reforms with global partnerships to diversify growth. The government aims to reduce the budget burden, create over 50,000 jobs, and generate KWD1bn (USD3.25bn) in annual revenue by 2030, with international institutions projecting steady non-oil growth ahead.
