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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 peace-deal hopes add to oversupply concerns. Oil prices fell today, extending last week’s steep drop, as markets assessed the possibility of a Ukraine-Russia peace deal that could bring additional barrels into an already oversupplied market. Brent slipped toward USD62/b and WTI dropped below USD58/b, with sentiment pressured by signs that President Trump’s proposed November 27 deadline for Ukraine’s backing may slip into next week. While the US said Ukraine views that plan as aligned with its national interests, European leaders warned at the G20 that the framework remains too favourable to Russia and requires further work. Crude futures are now heading for a fourth straight monthly loss, the longest since 2023, amid surging global output, including expanded OPEC+ supply and the IEA’s forecast for a record glut in 2026. Market indicators also show easing tightness, with WTI’s prompt spread narrowing to 24cents in backwardation, less than half its level a month ago.
Gold slips as markets reassess odds of a December Fed cut. Gold edged lower toward USD4,040/oz as investor reassessed the likelihood another Fed rate cut before year-end. Although New York Fed President John Williams signalled that lower borrowing costs may be justified soon, broader Fed messaging has remained cautious, keeping pressure on the metal. The recent US government shutdown has created a significant data gap, making upcoming releases on September retail sales, producer prices, and weekly jobless claims especially important for rate expectations. Futures markets currently imply just over a 60% chance of 25bps cut in December, a scenario that would typically support gold given its lack of yield. Gold remains up about 55% this year, buoyed by elevated geopolitical and trade uncertainty and mounting concerns over weak fiscal trajectories across major economies.
MIDDLE EAST - CREDIT TRADING
End of day comment – 22 November 2025. Weak markets from the start. The overhang of bonds in the market was again very visible in newer issues with sellers from ADGB 35s (unch/+2bp) to BOSUH 30s (-0.25pt/+8bp). There was one exception though, new FABUH 5.875 perps was well received and traded mostly wrapped around 100.25 today from 100 reoffer with retail interest holding it up. Today the market also saw sellers of long end IG bonds which so far had somewhat weathered the selloff better than other parts of the curve, ADGB 70s closing -0.25pt/+2bp. What has been atypical in this week’s widening though is that there doesn't seem to be much of credit differentiation. WoW I have ADGB and QATAR curve by and large 5/10bp wider and MOROC and OMAN 5/10bp wider as well. That is a bit counterintuitive but reflects that the widening of spreads has been rather orderly so far. That said going out still feels like a lot of sellers are around and bonds have not cleared yet despite better macro market performance into the close.
MIDDLE EAST - MACRO / MARKETS
Kuwait upgraded, Bahrain downgraded by S&P. S&P Global Ratings issued sharply contrasting assessments for Kuwait and Bahrain, underscoring diverging fiscal trajectories within the GCC. Kuwait’s sovereign credit rating was upgraded to AA- from A+ with a stable outlook, reflecting the country’s exceptionally strong fiscal and external positions supported by vase sovereign wealth fund assets, progress on financial and structural reforms, and efforts to improve long-term fiscal sustainability despite expected deficits in the coming years. Bahrain, however, was downgraded to B as S&P warned of worsening debt dynamics, widening fiscal deficits, and the heavy burden of debt servicing, among the highest relative to government revenues globally, driven largely by lower oil revenue resilience, high expenditure needs, and limited fiscal space. While Bahrain’s stable outlook depends heavily on continued financial support from wealthier GCC partners, Kuwait’s upgrade highlights growing investor confidence and reinforces its status as one of the region’s fiscally strongest sovereigns, illustrating a widening gap in credit risk profiles between the two gulf states.
UAE announced USD1bn “AI for Development” initiatives in Africa. The UAE announced a USD1bn investment initiative at the G20 Summit to accelerate AI-driven development across Africa, focusing on sectors such as education, healthcare, climate adaptation, and broader digital infrastructure. the programme-implemented through UAE agencies like ADEX, marks a strategic shift from traditional Emirati investment in African logistics and energy toward digital and AI infrastructure, aligning with the UAE’s ambition to become a global AI hub. It also positions the UAE as a key technology partner in Africa, while potentially sharping future African policies on data governance, AI regulation, and digital capacity-building. The UAE remains one of Africa’s largest external investors, its bilateral trade surged to about USD107bn in 2024, roughly 28% higher than the previous year, and it invested more than USD118bn across the continent between 2020 and 2024, according to the statement.
