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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 gains on trade talk optimism and diesel market tightness. Oil prices rose for a second day, buoyed by hopes of progress in US trade talks and growing tightness in the global diesel market. Brent crude approached USD70/b, while WTI held above USD66/b, as Indian officials expressed confidence in reaching a trade deal with the US before the 1 August deadline. Brazil and Mexico also indicated interest in strengthening commercial ties. Moreover, the EU’s recent tightening of restrictions on Russian energy imports has added to the supply strain. Still, broader crude market fundamentals remain under pressure as rising OPEC+ output stokes fears of oversupply. With summer demand expected to ease and production likely to stay high, inventories may build sharply in the coming months, potentially driving Brent prices down toward USD60/b. The OPEC+’s next policy meeting is scheduled for 3 August.
Gold stalls amid firm US jobs data but set for weekly gain. Gold held steady near USD3,370/oz on 25 July, paring yesterday’s 0.6% drop, as stronger than expected US labour market data damped expectations for imminent Fed rate cuts. Jobless claims fell for a six consecutive week, the longest such streak since 2022, lifting the dollar and Treasury yields, and weighing on non-yielding gold. Traders now see fewer than two rate cuts this year, with the first full move anticipated in October. Despite political tensions between President Trump and Fed Chair Powell, and ongoing uncertainty in global trade and geopolitics, gold remains rangebound after hitting a record high above USD3,500/oz in April, as market sentiment has gradually shifted toward risk assets on improving trade prospects.
MIDDLE EAST - CREDIT TRADING
End of day comment – 24 July 2025. Market took a bit of a breather today and was mixed. It was a feature this week though that afternoons are a bit more constructive in flows than the mornings. IG sovereign seen some profit taking in long end bonds today, both ADGB and QATAR closing -0.25pt/+2bp with activity in ADGB 49s, 50s and QATAR 50s. However short end tightened a bit since UST curve flattened along with EUR rates post ECB headline which lowered the rate cut likelihood. Still on the back of it seen some selling in QATAR 28s old closing -0.125pt/-3bp. Higher beta sovereign were mostly unchanged in cash terms and depending on where you look on the curve 2/5bp tighter. Activity was slow , OMAN had some morning profit taking which was easily absorbed by buyers. Quasis saw MASDAR tightening another 3bp as the market remains after 35s, equally MUBUAH had good bids in the 5-10y part of the curve closing 4bp tighter. Bond technicals remain the main price driver in this slow summer trading.
MIDDLE EAST - MACRO / MARKETS
Turkey resumes rate cuts as inflation stabilise and markets rebound. The Central Bank of Turkey (CBRT) resumed its easing cycle for the first time since March, cutting the one-week repo rate by 300bps to 43.0%, signalling growing confidence in the country’s macroeconomic stability amid easing inflation and recovering markets. The CBRT officials noted that future cuts will be assessed on a meeting-by-meeting basis, emphasising that monetary policy will remain tight until price stability is firmly anchored. June inflation eased more than expected to 35.1% y/y, bringing it closer to the bank’s year-end target of 24%, while Turkish assets have rallied following a politically turbulent spring. The bank also reduced the overnight lending and borrowing rates and forecast a temporary inflation uptick in July due to tax increases. While markets welcomed the move, with equities rising and bond yields easing, lingering political uncertainties continue to present downside risks to Turkey’s investment outlook.
Saudi non-oil exports rise while oil trade slows amid diversification push. May trade balance data released by the General Authority for Statistics (GASTAT) showed that Saudi Arabia’s non-oil exports, including re-exports, rose 6% y/y to SAR31.1bn (USD8.29bn), with re-exports jumping 20.5% y/y, although national non-oil exports slipped 1.8% y/y, reflecting continued progress under Vision 2030 to diversify the economy. Machinery and electrical equipment led non-oil exports, jumping 99.8% y/y and accounting for 23.7% of the total, followed by chemicals. The UAE remained the top non-oil trade partner, receiving SAR9.54bn in goods, with other major destinations including India, China, and Bahrain. Despite the non-oil strength, overall merchandise exports declined 14% y/y to SAR90.4bn due to a 21.8% drop in oil exports, reducing oil’s share in total exports to 65.6%. imports rose 7.8% y/y to SAR80.9bn, led by machinery and transport goods, narrowing the merchandise trade surplus by 68.4% y/y to SAR9.5bn. China remained Saudi Arabia’s largest trading partner for both imports and exports, followed by the UAE and India.
