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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 above USD65/b as Greenland tensions ease. Oil steadied with Brent trading above USD65/b and WTI near USD61/b after geopolitical tensions over Greenland cooled, supporting broader markets and helping offset ongoing supply concerns. Prices have edged higher in early 2026, initially buoyed by unrest in Iran and shipment disruptions from Kazakhstan, even as fears persist that global output will exceed demand following sustained increases by OPEC+ and rival producers. The International Energy Agency (IEA) reiterated its expectation of a major glut this year, despite a modest upgrade to demand growth, while US stockpiles rose by 3 million barrels last week. On the supply front, the restart of the Caspian Pipeline Consortium terminal is set to lift loadings just as Venezuelan barrels return to the market, and India’s Reliance has resumed purchases of Russian crude, factors that continue to shape a finely balanced outlook.
Gold pulls back from record after Trump eases Greenland tariff threat. Gold slipped after US President Trump withdrew his threat to impose tariffs on European nations and said a “framework of a future deal” over Greenland had been agreed, easing some of the geopolitical risk that had fuelled a surge to record highs. Gold fell as much as 1.2% after touching an all-time peak above USD4,888/oz, though it remained up more than 4% for the week amid lingering global tensions and renewed pressure by the Trump administration on the Fed, which has weighed on confidence in the dollar. Silver recovered to trade above USD93/oz after an early dip, extending a rally that has seen it triple over the past year on a historic short squeeze, strong retail demand and lingering concerns over supply, even as confusion over Chinese export licensing and elevated Comex inventories keep markets on edge.
MIDDLE EAST - CREDIT TRADING
End of day comment – 21 January 2026. Not the busiest of mornings as the market was awaiting Trump. Whilst JGBs and UST had seen a recovery overnight and provided an early bid to the market, the move faded into Trumps speech. Macro risk responded positively to comments around Greenland, but GCC was still very sticky in price terms. It just feels like the widening bias remains intact with bonds getting sold yesterday still hanging around and net selling from RM accounts. What outperformed today was ADGB, long end had a good bid and closed +0.25pt/-3bp. 35s also cleared tighter in the afternoon closing +0.125pt/-1bp. Against this though other names/curves remained broadly unchanged in cash prices and spreads. In higher beta seen some selling in SHARSK and SHJGOV reflecting the skittish mood although here as well the market just about went out unchanged. Primary markets remain quiet in my universe as Saudi names continue to tap the market. The overall feeling remains the market has bonds to sell.
MIDDLE EAST - MACRO / MARKETS
Arab Energy Fund wins approval for up to UD1.4bn Panda Bond program in China. The Arab Energy Fund (TAEF) has received regulatory approval in China to raise up to USD1.4bn through yuan-denominated “panda bonds” over a two-year period, potentially creating one of the largest such programs ever by a Middle Eastern issuer. Back by Gulf sovereigns including Saudi Arabia and the UAE, TAEF plans to launch its first onshore Chinese bond later this year, marking its debut in the panda market and underscoring the region’s push to ta cheaper Chinese funding amid deepening trade ties. The move comes as panda bond coupons have fallen to record lows near 2.1%, well below dollar financing costs, and aligns with TAEF’s strategy to expand visibility in Asian markets while ramping up private equity and project finance, targeting a 60% increase in total investments to USD12bn over the next three years. The program would be the largest by a GCC entity, following only two prior Sharjah deals, and reflects a broader Gulf pivot toward China as trade volumes surge and diversify funding sources.
Egypt current account deficit narrows sharply on remittances and services boom. Egypt’s current account deficit narrowed by 45.2% to USD3.2bn in the Q3 of FY2025/26 from USD5.9bn a year earlier, supported by a surge in remittances and stronger services revenues, according to the Central Bank of Egypt (CBE). Net unrequited current transfers rose 28.4% to USD10.7bn, driven by a 29.8% increase in worker remittances to USD10.8bn, while the services surplus climbed 23.4% to USD5bn as tourism receipts rose to USD5.5bn and Suez Canal revenues increased to USD1.05bn. The non-oil trade deficit narrowed slightly to USD9.5bn on higher export proceeds, though gains were partly offset by a wider oil trade deficit of USD5.2bn due to higher energy imports. The capital and financial account swung to a net outflow of USD366 million, reflecting a rise in banks’ foreign assets, even as foreign direct investment posted a USD2.4bn net inflow and portfolio investment retuned to a USD1.8bn net inflow.
