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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 declines as tariff deadline nears and supply outlook weighs on market. Oil prices fell for a third straight session, with Brent hovering near USD69/b and WTI around USD67/b, as urgency builds in trade negotiations between the US and its partners ahead of an August 1 deadline. President Trump has threatened sweeping 30% tariffs on EU exports if no deal is reached, amplifying downside risks. The bearish sentiment is reinforced by expectations of a better-supplied oil market later in the year and fresh EU sanctions on Russian crude and refined fuels, which the US has yet to endorse. Meanwhile, US signalled future talks with China could address purchases of Russian and Iranian oil, potentially complicating progress. Despite gains earlier in July, Brent remains down over 7% for the year, pressured by trade tensions, OPEC+ output increases, and ongoing sanctions affecting global supply dynamics.
Gold near one-month high as trade tensions boost safe-haven demand. Gold held near a one-month high around USD3,396/oz as renewed trade tensions ahead of President Trump’s August 1 tariff deadline spurred safe-haven buying. Gold rose 1.4% in the previous session, supported by a weakening dollar, which had its worst day in nearly a month. While the Fed’s interest rate outlook remains uncertain, with officials divided on the inflation impact of Trump’s tariff agenda, traders are betting on modest easing by year-end. Despite little chance of a rate cut at next week’s Fed meeting, gold has gained over 25% this year on trade concerns and geopolitical instability, maintaining a tight trading range in recent months.
MIDDLE EAST - CREDIT TRADING
End of day comment – 21 July 2025. The market remains strong overall. Today this might not show in tighter spreads, but on UST moves like this we would normally see some spread widening. Instead cash followed nearly one to one the underlying rates move. Flows remain quiet, seen a bit more ETF activity in the afternoon which were buying flows, against that seen also a bit of selling in QATAR index names in the afternoon from RM. IG sovereign curve closing broadly -1bp with some activity in ADGB 54s and QATAR long end, 49s closing +1.125pt/-1bp. Oman was maybe the one credit lagging, but given the squeeze on Friday and cash another 0.5pt higher today the 4bp widening move today doesn't feel like any weakness in the credit. In fins seen a bit activity in the morning in new QNBK 4.5 30s which is steadily moving higher closing 99.625/875 (+0.25pt/-1bp). In corps DPWDU remains in demand, especially like on Friday the 33s which doesn't seem to find any clearing level yet closing +0.5pt/-2bp. Flows remain light overall but with not much offer side liquidity away from some QATAR issues every small inflow is able to push markets up/tighter. As long as macro remains constructive it doesn't look this will change anytime soon.
MIDDLE EAST - MACRO / MARKETS
Egypt boosts US investment drive and negotiations new German debt swap. Egypt Prime Minister Mostafa Madbouly has directed his Cabinet to compile a package of investment opportunities for US firms, aiming to deepen economic ties and attract more foreign direct investment as part of Egypt’s Vision 2030 strategy. The initiatives builds on momentum from the recent US-Egypt Policy Leaders Forum, where it was noted that 1,800 US companies have invested USD47bn in Egypt over the past 20 years. Cabinet ministers discussed specific sectors targeted for US investment, including ports, maritime transport, and industrial zones. Additionally, Egypt’s Minister highlighted ongoing development programs with the US and announced talks with Germany on a new EUR100 million debt swap agreement, with the first tranche expected in December 2025. Once finalised, the deal will raise the total value to EUR340 million, reinforcing support for sustainable development projects.
Turkey seeks new oil pipeline deal with Iraq amid export stalemate. Turkey plans to renegotiate its oil export pipeline agreement with Iraq, aiming to replace the decades-old 1973 deal, which is set to expire in July 2026. The move follows over two years of halted operations due to a USD1.5bn arbitration ruling against Turkey for unauthorised exports from Iraq’s Kurdish region. Turkish officials, citing dissatisfaction with the current pipeline’s underuse, believe a new deal could better serve both nations. While Iraq’s federal and regional governments recently agreed on an oil-transfer plan, contracts with Kurdish oil firms remain unsigned, and Turkey’s push for renegotiation could present a fresh obstacle. The pipeline previously transported around 500,000b/d and has a capacity of up to 1.5 million barrels. Its revival is also linked to Turkey’s broader ambition under the Development Road project, which aims to connect Iraq’s energy infrastructure to Europe through Turkish ports.
