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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 rallies as US sanctions Russia’s top producers, escalating pressure. Oil prices surged after the US imposed sweeping sanctions on Russia’s two largest producers, Rosneft and Lukoil, intensifying pressure on Russia to end the war in Ukraine. Brent rose over 3% above USD64/b, while WTI near USD60/b, as US’s move is expected to cut Russian crude exports to India to near zero. The sanctions mark a major policy shift for President Trump, who had previously signalled willingness to negotiate with President Putin, but now cites Russia’s lack of commitment to peace. The decision contrast with earlier Western strategies like the G7 oil price cap that sought to curb Russian revenue without disrupting supply. Despite the rebound, Brent remains headed for a third consecutive monthly loss, as markets continue to weigh emerging signs of a global surplus. Going forward, geopolitical developments enforcement of these sanctions will be key in shaping oil flows and global price stability.
Gold extends slide as overheating fears trigger ETF outflows. Gold prices fell for a third straight session, nearing USD4,000/oz, as investors grew cautious after a record-breaking rally. The metal dropped 0.5% today, driven by the largest single day outflow from gold-backed ETFs in five months, signalling profit-taking and a technical correction. The retreat, amounting to a 6% slide over two days, reflects growing concerns that the market had overheated amid a strong “debasement trade”, where investors sought refuge from rising fiscal deficits and currency risks. Despite the pullback, gold remains up about 55% this year, supported by expectations of at least one Fed rate cut by year-end. Investors are also watching upcoming US-China trade talks, which could ease geopolitical tensions that previously fuelled demand for safe-haven assets.
MIDDLE EAST - CREDIT TRADING
End of day comment – 22 October 2025. Much quieter session for the names I cover. We closed overall tighter as the morning was very strong. However activity was low and the afternoon saw the risk mood overall shifting a bit. This resulted in light outflows from ETFs and RM. Sovereign bonds though remained firm and again led by the strong bid in duration bonds. ADGB/ QATAR long end closed 0.125/0.25pt higher and 2/3bp tighter. Quasi sovereign long end also had a strong day matching the sovereign performance. The belly bonds were much more two way though and saw some selling in the afternoon. In higher beta bonds OMAN moved a touch lower in long end this afternoon with most activity in 47s (-0.25pt/+0bp). New OETC 5y green sukuk was launched at T+110bp with a reported order book of over 1.75bn. Financial bonds found sellers in the newer issues but prices managed to hold stable
MIDDLE EAST - MACRO / MARKETS
EU deepens economic ties with Egypt through EUR7.4bn deal. At the EU-Egypt Summit held on October 22 in Cairo, both sides solidified their Strategic and Comprehensive Partnership with the announcement of a EUR7.4bn financial and investment package spanning 2024-27, designed to bolster Egypt’s economic stability, enhance competitiveness, and accelerate the green and digital transitions. The package includes a EUR1bn disbursement of short-term macro-financial assistance already provided by the EU to help Egypt manage fiscal pressures and balance of payment challenges, along with a newly signed EUR4bn MoU aimed at supporting structural reforms, sustainable growth, and investment-friendly conditions. The remaining funds will be channelled toward infrastructure development, private-sector support, and social programs under the partnership’s six pillars, covering political relations, trade and investment, migration, and human capital. In parallel, European private companies announced over EUR40bn in investment deals and MoU with Egyptian partners across critical sectors such as renewable energy, water desalination, and infrastructure, further positioning the EU as Egypt’s leading economic and strategic partner in the region while reinforcing Egypt’s role as a key stabilising force in the Mediterranean and broader MENA region.
World Bank estimates Syria’s reconstruction needs at USD216bn. The World Bank’s new report estimates that rebuilding Syria after more than a decade of devastating conflict will require around USD216bn, with the total range of needs projected between USD140bn and USD345bn, depending on the scope of recovery efforts. The study finds that roughly one-third of Syria’s pre-war capital stock has been destroyed, resulting in USD108bn in direct physical losses. Reconstruction needs are estimated at USD75bn for housing, USD59bn for non-residential buildings, and USD82bn for infrastructure network. The report highlights the national economy remains severely constrained, with total reconstruction costs amounting to nearly ten times Syria’s projected 2024 GDP. The World Bank stresses that rebuilding Syria will demand sustained international cooperation, large-scale investment, and governance reforms to restore livelihoods, essential services, and long-term stability.
