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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 rises on weaker dollar and risk-on sentiment despite supply pressures. Oil prices gained as a weaker US dollar and a risk-on mood across global markets outweighed concerns about rising crude supplies. Brent climbed toward USD65/b, on track for a fifth consecutive weekly gain, while WTI hovered near USD60/b. The advance comes despite persistent worries about a global glut after supply increases from OPEC+ and producers outside the alliance, with the IEA reiterating that output is set to exceed demand this year. Signs of ample supply remain evident, including a second straight weekly rise in US crude inventories to the highest level since November, the return of flows in the Mediterranean and Black Sea, and Venezuelan barrels re-entering global markets following recent US intervention.
Gold hits record near USD5,000/oz as geopolitical risks and Fed pressure fuel haven demand. Gold surged to an all-time high near USD5,000/oz, extending a powerful rally driven by heightened geopolitical risks, weaker US dollar, and renewed concerns over the Fed’s independence. Gold climb above USD4,967 and was set for a weekly gain of almost 8%, while silver and platinum also reached record levels as the dollar posted its biggest weekly drip since June, boosting demand for precious metals. The rally has been reinforced by growing investor unease over US political pressure on the Fed, military intervention in Venezuela, and lingering tensions around Greenland, all of which have strengthened the so-called debasement trade. Expectations that the next Fed chair could take a more dovish stance have further supported non-yielding assets, while strong retail demand, supply tightness, and policy uncertainty have added to volatility across the precious metal complex.
MIDDLE EAST - CREDIT TRADING
End of day comment – 22 January 2026. Strong day. Both in price and spread terms. Overnight Trump announced a framework deal on Greenland and backed off European tariffs sending risk markets and UST higher. So in the morning cash prices adjusted to the right and the market was chasing long end bonds. Activity quietened down late morning and with UST fading and higher yields some RM selling came in. Largely though cash prices held firm and the selling got absorbed easily. High beta outperformed today, especially OMAN where long end bonds closed +0.5pt/-4bp. Seen also buying in SHARSK/SHJGOV were cash closed 0.125/0.5pt higher and 4/5bp tighter on the day. IG names were quieter but largely unch/+0.375pt higher and 2/3bp tighter with long end bonds outperforming. In primary markets Al Masraf announced its inaugural 5y bond which priced at T+125bp (500mm). With the U turn in risk sentiment we should expect more primary activity.
MIDDLE EAST - MACRO / MARKETS
CBRT delivers cautious 100bps cut as inflation risks temper easing pace. Turkey’s Central Bank (CBRT) cut its kept policy rate by 100bsps to 37.0%, a smaller move than expected, signalling a more cautious approach amid near-term inflation risks. While the central bank acknowledged that the underlying inflation trend eased in December, it flagged firmer monthly inflation in January, driven mainly by food prices, and noted that demand is still supporting disinflation but at a slowing pace. The decision suggest policymakers are placing greater weight on inflation risks, including the impact of a 27% minimum wage hike and uncertainty around upcoming CPI methodology changes. Despite the slower start, expectations remain for inflation to improve in February and March, supporting a larger 150bps cut at the March meeting and a policy rate of 28.5% by year-end, though risks are skewed to the upside. From a strategy perspective, the cautious cut reinforces confidence in maintaining tight conditions for now, supporting a short USD/TRY stance while awaiting clear inflation signals before entering duration trades.
World Bank lowers Lebanon’s 2025 growth outlook as IMF talks highlight reform urgency. The World Bank has cut its forecast for Lebanon’s 2025 real GDP growth to 3.5% from 4.7%, citing a weaker than expected tourism season amid ongoing conflict, subdued investment, and limited reconstruction spending, while projecting growth of 4% in 2026 if reforms continue, modest reconstruction inflows materialise, and political stability is preserved. The bank expects inflation to fall into single digits in 2026 for the first time since 2019, with remittances and tourism remaining key drivers of the fragile recovery, even as delays to critical reforms and regional instability pose downside risks. The fiscal balance is seen moving into surplus on a cash basis, though stronger revenue mobilisation and more progressive taxation are still needed. Separately, Lebanon’s prime minister said the IMF has asked for amendments to a proposed law aimed at allowing depositors to recover up to USD100,000 of trapped bank funds over four years, underscoring the complexity of negotiations toward a potential IMF program, with a technical mission scheduled for February.
