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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 steadies as geopolitics lift price but Kurdistan exports loom. Oil prices steadied after Brent surged past USD69/b and WTI hovered near USD65/b, following President Trump’s call for NATO to shoot down Russian aircraft violating airspace and for Europe to halt purchases of Russian energy, prompting investors to unwind bearish positions. US data showing crude inventories at their lowest since January added bullish momentum, but supply concerns resurfaced as Iraq’s Kurdistan region prepared to resume pipeline exports after a two-year halt, with flows expected to start at 230,000b/d, potentially rise to 500,000b/d. Futures remain confined to a narrow range since August as traders balance escalating geopolitical risks, including renewed Ukrainian strikes on Russian energy infrastructure, with bearish fundamentals, as the International Energy Agency (IEA) forecasts a supply glut later this year from OPEC+ and non-OPEC output growth.
Gold holds near record as Fed uncertainty and strong US data weigh on outlook. Gold hovered near to USDD3,745/oz, less than USD50 below Tuesday’s record, as traders weighed upbeat US holding data and mixed signals from Fed officials, which clouded the timing of future rate cuts. Prices slipped after new-home sales surged in August to their fastest pace since early 2022, boosting the dollar and raising concerns about fewer cuts ahead, while Treasury Secretary Scott Bessent criticised Fed Chair for lacking a clear easing agenda. Still, gold remains near record highs, supported by last week’s Fed rate cut, strong central bank demand, and record inflows into gold-backed ETFs. Looking ahead, investors are focused on Friday’s US personal consumption expenditure index, the Fed’s preferred inflation gauge, which could strengthen the case for further monetary easing.
MIDDLE EAST - CREDIT TRADING
End of day comment – 24 September 2025. Much more active day compared to yesterday. Sellers overall outstripped buyers by 2:1 but that was partly new issue driven. Interdealer flows remain very high, again initiated by dealer selling. So everything should widen? Not quite. Technicals are continuing to rule the price moves, IG sovereign long end bonds for example were another 1/4bp tighter with cash prices up to 0.5pt higher, led again by ADGB 70s. Against this though there is a bit of yield selling in the sovereign curves in the 5y bucket, take ADGB 29s today which was offered throughout the day closing -0.125pt/+2bp. Seeing the same in quasi sovereigns where long end bonds held firm especially in MUBAUH, 53s closing +0.5pt/-3bp. But at the same time there is a push back in shorter end bonds approaching 4%yield levels like in ADQABU 29s, 30s or ADNOCM 29s. In the financial space new QNBK 30s EUR was active mostly in the morning and was holding just above reoffer with most trades in a tight 99.40/99.45 range. Bank Muscat just priced its 5y USD bond at T+115bp (4.846%, reoffer 100, 750mm).
MIDDLE EAST - MACRO / MARKETS
IMF Notes Kuwait’s recovery amid reform push. An IMF mission to Kuwait reported that the economy is recovering after last year’s contraction, with real GDP projected to expand 2.6% in 2025 on the back of higher oil output following the unwinding of OPEC+ cuts and stronger non-oil growth of 2.7% supported by resilient domestic demand. Inflation continues to moderate, falling from 2.9% in 2024 to a projected 2.2% in 2025, but lower oil prices are expected to widen the fiscal deficit to 7.8% of GDP in FY2025/26 and narrow the current account surplus to 26.5% of GDP. Financial stability remains intact, with solid bank capital and liquidity buffers, low non-performing loans, and accelerating private-sector credit growth. Risks to the outlook are broadly balanced but remain heavily tied to oil price volatility and OPEC+ production dynamics. On reforms, progress has been made with the extension of a 15% corporate income tax to large multinationals and the passage of a new Public Debt Law in March 2025, though the IMF stressed that faster fiscal and structural reform is needed to diversify the economy, enhance competitiveness, and sustain non-oil growth.
Iraq nears resumption of Kurdistan oil exports after two-year halt. Iraq expects oil exports from its Kurdistan region to restart this week after a landmark deal with producers, ending a two-year suspension that has cost the country up to USD25bn in lost revenue. Flows through the Ceyhan pipeline to Turkey are set to resume at an initial 230,000b/d with potential to reach 400,000-500,000b/d as new investments and fields ramp up. The agreement, signed with most major producers in the semi-autonomous region, provides payment grantees to firms and paves the way for broader participation, including talks with Kurdistan’s largest producer. Iraq has also begun negotiations with Turkey for a new pipeline agreement ahead of the current deal’s 2026 expiry. Resumed exports would be bolster Iraq’s finances, but they also risk adding to global oversupply concerns at a time when the oil market is already bracing for a glut.
