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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 slips as markets assess prospects for US-Iran nuclear deal. Oil prices eased, with Brent falling toward USD71/b and WTI also declining, as investors weighed the possibility of renewed diplomacy between the US and Iran despite ongoing military deployments in the Middle East. While President Trump signalled, he was considering a limited strike, Iranian officials expressed optimism about reaching a “win-win” diplomatic solution, with further talks expected in Geneva. Crude has risen this year largely on geopolitical risk premiums tied to fears of supply disruptions, particularly around the Strait of Hormuz, a critical transit route for Gulf oil exports. However, the recent narrowing in Brent’s backwardation suggests traders see less immediate supply tightness, even as tensions remain elevated and markets continue to hedge against potential disruptions.
Gold rises as trade uncertainty and dollar weakness boost demand. Gold advanced for a fourth straight week, climbing toward USD5,180/oz as uncertainty over US trade policy and a weaker dollar lifted safe-haven demand. Markets were unsettled after President Trump said he would impose a 15% global tariff following a Supreme Court ruling limiting its emergency trade powers, casting doubt on recently negotiated trade deals and prompting cautious reactions from major partners. The softer dollar made gold more attractive to international buyers, supporting prices. Gold’s rebound follows a sharp correction earlier in the month and continue to be underpinned by persistent geopolitical tensions, concerns over traditional assets, and renewed risks in the Middle East as US-Iran nuclear talks proceed alongside a significant American military build-up in the region.
MIDDLE EAST - CREDIT TRADING
End of day comment – 20 February 2026. A typical Friday until we got the grand finale around 3:30pm with the supreme court tariff ruling. The most persistent move since then is the steepening of the UST curve and initial GCC bond flows 'confirmed' that with sellers of long end bonds. That said the tightening of the swap spread curve cushions a bit the weakness in the 30y bond. At EOD spreads and cash prices are broadly unchanged. Whilst the long end feels a bit heavy going out, 5/10y remains very well anchored. One credit which saw a bit of weakness was DPWDU today on the back of the Iran worries, 37s closed -0.25pt/+2bp. Activity should pick up next week with holidays coming to an end and primary markets should restart as well.
MIDDLE EAST - MACRO / MARKETS
Lebanon weighs gold reserves to address financial crisis. According to the FT, Lebanese bankers and some politicians are quietly considering selling or leasing part of the country’s sizable gold reserves, now valued at roughly USD45bn after a surge in global gold prices, as a potential way to help cover massive financial losses from the country’s 2019 economic collapse. Lebanon holds more than 280 tonnes of gold, the second largest reserves in the Middle East after Saudi Arabia, but existing law prohibits selling without parliamentary approval. The proposal is highly controversial, with critics arguing it would effectively shift the burden of losses from banks to the public by using national assets to repay depositors, particularly larger ones, while leaving structural reforms unaddressed. The debate comes amid efforts to pass a “financial gap law”, a key requirement for unlocking IMF support, though the draft currently excludes gold sales. Experts warned that without new liquidity sources, the central bank may struggle to meet repayment commitments. Despite the gold’s soaring value offering a rare opportunity to ease financial pressures, strong public opposition and political sensitivities have kept most discussions behind closed doors, reflecting deep divisions over how to distribute the costs of Lebanon’s prolonged economic crisis.
Syria secures USD50 million World Bank funding for transport project. Syria has obtained a USD50 million financing package from the World Bank to advance transport infrastructure projects as part of broader efforts to revie the economy and modernize critical sectors. The agreement was reached in Damascus between Transport Minister and the World Bank’s regional director for the Middle East, according to state media. The funds will be used to acquire 15 new locomotives and conduct technical valuations of existing railway engines to determine maintenance and upgrade needs across the national rail network. Discussions also covered the proposed Phosphate Transport Corridor, designed to streamline phosphate exports to ports, with both sides agreeing to reassess its economic feasibility to ensure long-term sustainability. Officials emphasised that transport reform is central to economic recovery while the World Bank reiterated its commitment to supporting Syria’s development initiatives. A follow-up technical meeting is scheduled for next week, as Syria seeks to rebuild infrastructure, attract investment, and reengage internationally under a new transitional administration formed earlier this year.
