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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 gains as supply risks offset rising inventories. Oil prices held onto a five-day rally as escalating geopolitical tensions counterbalanced signs of growing global supply. Brent traded near USD62/b and WTI above USD58/b after gains of nearly 6% over the past five sessions, supported by US actions against Venezuelan oil shipments and concerns that Russian crude cargoes could also face disruptions. At the same time, swelling inventories weighed on sentiment, with US crude stockpiles rising by 2.4mb last week and Russian oil volumes at sea jumping sharply since August. Despite these supply risks, oil remains down about 16% this year and is on track for its biggest annual decline since 2020 as supply is expected to outpace demand, while thin holiday trading kept volumes subdued.
Gold, silver, and platinum hit record highs as haven demand intensifies. Gold climbed to new all-time high above USD4,500/oz as escalating tensions in Venezuela and expectations of further US rate cuts strengthened demand for safe-haven assets, with silver and platinum also advancing to record levels. The rally has been supported by heavy central bank purchases, strong inflows into gold-backed ETFs, and investor concerns over currency debasement and rising global debt, pushing gold up more than 70% this year and silver about 150%, both on track for their strongest annual performance since 1979. Silver surged above USD70/oz amid speculative inflows and lingering supply dislocations following an earlier short squeeze, while platinum jumped to levels last seen decades ago, buoyed by tight supplies, supply disruptions in South Africa, and a tightening London market. With major banks forecasting further gains into 2026, the strength of physical demand and persistent geopolitical and monetary uncertainties suggest the precious metals rally could continue.
MIDDLE EAST - MACRO / MARKETS
UAE economy shows strong resilience and broad-based growth. The Central Bank of the UAE’s Quarterly Economic Review (December 2025) highlights the UAE’s strong economic resilience amid global uncertainty, with GDP growing 4.5% y/y in Q2 2025 and full-year growth forecast at 5.0%, rising further to 5.2% in 2026, driven by robust non-hydrocarbon activity and a rebound in hydrocarbon output following higher OPEC+ quotas. Inflation remains subdued, averaging around 1.0% in 2025, prompting a downward revision of the inflation forecast to 1.3%, supported by easing food and transportation prices. Monetary policy has eased in line with the US Fed, with the CBUAE cutting its base rate to 3.90%, while financial conditions remain supportive. The banking sector continues to expand strongly, with double-digit growth in assets, credit, and deposits alongside improving asset quality. Non-oil foreign trade surged, real estate transactions accelerated, tourism and aviation hit record levels, and capital markets posted strong gains, underscoring broad-based momentum and sustained investor confidence in the UAE economy. Overall, the report points to sustained momentum, strong fundamentals, and a favourable medium-term outlook for the UAE economy, underpinned by diversification, policy credibility, and investor confidence.
Egypt secures USD1.15n Chinese investment in Suez Canal industrial zone. Egypt has signed contracts worth about USD1.15bn to establish three major industrial projects in the Sokhna Industrial Area within the Suez Canal Economic Zone, a move expected to create around 5,400 jobs and strengthen export-oriented manufacturing. The agreements, signed between TEDA-Egypt and Chinese firms Xin Feng Ming Group, Chaoyang Langma Tire, and Tongling Jieya Biotechnology in the presence of Prime Minister Mostafa Madbouly, include an integrated polyester fiber and polymer complex exceeding USD800 million in investment, a USD190 million heavy-duty and passenger car tire manufacturing facility, and a USD160 million hygiene products plant. Spanning phased developments through 2030, the projects will support Egypt’s textile, automotive and consumer goods industries, boost exports, and deepen integration into global value chains, underscoring growing international confidence in Egypt’s investment climate and the strategic role of the Suez Canal Economic Zone.
Turkey raises minimum wage in line with inflation to support disinflation efforts. Turkey has raised its monthly net minimum wage by 27% for next year to TRY28,075 (USD655), a move broadly in line with inflation forecasts and aimed at reinforcing policymakers’ commitment to disinflation. The minimum wage, which applies to more than a third of the workforce and serves as a reference point for wider private-sector pay agreements, is a politically sensitive issue and has often fuelled debate between the government and labour groups, with Turk-Is boycotting this year’s negotiations over concerns about wage erosion. The latest increase marks a departure from the generous pre-election pay hikes seen in 2023 that boosted domestic demand and stoked inflation, and instead aligns with the market-friendly policy stance adopted since then, including tighter credit and higher interest rates. While inflation has fallen sharply from its peak, it remains elevated at around 31%, well above the central bank’s long-term target, highlighting the balancing act between protecting household incomes and restoring price stability.
