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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 heads for biggest weekly gain on US sanctions against Russian producers. Oil prices were set for their strongest weekly advance since June, as US sanctions on Russia’s top oil companies, Rosneft and Lukoil, roiled global markets and heightened concerns over supply disruptions. Brent traded near USD65/b, up about 7% for the week, while WTI hovered below USD62/b. The measures, which target key Russian producers over Moscow’s ongoing war in Ukraine, are expected to slash Russian crude flows to India and prompt some Chinese refiners to halt spot purchases, intensifying shifts in global trade flows. The European Union added pressure with new sanctions on Russia’s energy infrastructure, while ongoing Ukrainian strikes further threaten supply. The sanctions mark a sharp reversal in US policy, moving from price caps to direct restrictions. In response, Russia plans to reply on shadow tankers and alternative traders to mitigate revenue losses. The market’s prompt Brent spread widened sharply, reflecting renewed bullish sentiment and tighter near-term supply.
Gold set for first weekly loss after sharp correction. Gold was poised to end a nine-week winning streak, easing from record highs as investors reassessed an overheated rally. Gold steadied above USD4,140/oz, the steepest drop since May. The selloff followed profit-taking after prices hit an all-time high of USD4,381.52 on Monday and coincided with the largest single-day outflow from gold-backed ETFs in five months. The correction came as optimism grew over potential progress in US-China trade talks, which could reduce demand for safe-haven assets. Technical indicators had shown the metal was heavily overbought since early September, while volatility surged as traders rushed to hedge against further swings. Investors are now turning their attention to the upcoming US inflation data for clues on monetary policy.
MIDDLE EAST - CREDIT TRADING
End of day comment – 23 October 2025. Very mixed markets. The market was greeted by higher oil prices on Trumps Russia sanction move which caused UST to correct lower. That had though a different impact on the market. Long end bonds didn't moved much and remained well bid whilst selling in 3/8y bonds accelerated from account side and ETFs. In yield terms long end above 5% remains bid whilst shorter end with yields lower than 4.375% are starting to trade heavy. Take for example ADNOUH 47s which got bought today and closed +0.375pt/-5bp whilst shorter end bonds closed about unchanged. Newer issued bonds also remained heavy as seen in selling interest in new QNBK 30s EUR (-0.10pt/+0bp) and DHBKQD 31s (-0.125/+0bp). Speaking of new issues new OMGRID 30s had a very quiet day trading a touch below reoffer, but not much volume went through closing it 99.875/100.00 from 100 reoffer. The market and spreads feel a bit dislocated at the moment after this UST correction with bond technicals still winning over underlying rates move. It usually take 1/2 days for the market to adapt. This will make tomorrows CPI number even more important as ever tightening UST spreads are starting to wake sellers up.
MIDDLE EAST - MACRO / MARKETS
Turkey moderates rate cuts as inflation risks persist. The Central Bank of Turkey (CBRT) slowed its pace of monetary easing, cutting the one-week repo rate by 100bps to 39.5%. The CBRT reiterated its commitment to a tight policy stance guided by interim inflation targets and emphasised a meeting-by-meeting approach, with room to tighten if inflation deviates from the projected path. We now expect the policy rate to end the year at 38.5% as the CBRT opts for smaller, measured cuts through year-end. Inflation is projected to resume its downward trend from November, though food supply constraints and persistent price pressures pose upside risks to the 31.5% year-end inflation forecast. Looking ahead, inflation is seen easing to 21% by end-2026, with the policy rate gradually declining to 26%, keeping real rates positive and maintaining credibility. Going forward, the CBRT’s cautious tone suggest a deliberate balance between supporting growth and safeguarding price stability.
AI could mobilise USD200bn in sustainable finance for MENA by 2030. According to a recent World Economic Forum (WEF) report, artificial intelligence (AI) could unlock up to USD200bn in sustainable financing across the MENA region by 2030, helping close around 30% of the region’s estimated USD675bn sustainability funding gap. The report highlights how AI can enhance the deal sourcing, sustainability risk assessment, and project efficiency within the financial ecosystem. A prototype identified investment opportunities capable of avoiding 3.8 million tons of CO2 and creating about 50,000 green jobs over five years. Currently, sustainable finance flows in MENA represent only 1% of GDP, compared with 4.6% in the EU, underscoring the need to accelerate capital allocation toward renewables and climate-resilient infrastructure. The WEF emphasised that realising this potential will require scaling AI adoption responsibly, strengthening data infrastructure, and fostering collaboration between governments, financial institutions, and technology providers.
