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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 steady ahead of US-Iran talks as supply and geopolitical clash. Oil prices steadies, with Brent near USD71/b and WTI around USD65/b, as investor balanced expectations of renewed US-Iran nuclear negotiations against growing Middle East supply. Markets remain caught between bearish forecasts of a global supply glut this year and geopolitical uncertainty linked to the US military buildup in the region ahead of talks in Geneva. While President Trump reiterated his preference for a diplomatic outcome, he also warned of consequences if negotiations fail and expanded sanctions targeting Iranian-linked oil and weapons network, keeping risk premiums elevated. At the same time, Saudi Arabia is on track to post its highest crude exports in nearly three years, with additional supply increases from Iraq, Kuwait, and the UAE, and rising Iranian tanker loadings adding to global flows. Traders are now closely watching the upcoming OPEC+ meeting for guidance on April production policy, as the group weighs modest output increases against the ongoing regional uncertainty.
Gold climbs on Middle East tensions and tariff uncertainty. Gold advanced toward USD5,200/oz extending recent gains as investors reacted to heightened geopolitical tensions and renewed US trade policy uncertainty. Gold has risen supported by a US military buildup in the Middle East and fresh sanctions targeting entities linked to Iranian oil and weapons sales ahead of nuclear talks in Geneva. At the same time, President Trump moved to reinforce his tariff agenda, with a 10% global levy already in effect and plans to raise duties to 15% where deemed appropriate, adding strain to global trade relations. A slightly weaker US dollar also supported prices. Gold is now up nearly 20% this year, as investors continue to seek safe-haven assets amid geopolitical risks, trade tensions, and concerns about Fed independence.
MIDDLE EAST - CREDIT TRADING
End of day comment – 25 February 2026. The flow picture remains very subdued with volumes tracing/ trading about 50% of normal levels. The weakness in long end bonds continues. Also, today we saw some index related outflows, again if they happen in bonds up to 7y the market takes it down easily, in the 10y areas it depends, and in the 30y area the market/ dealers don't want to add. That led to another day of credit curve steepening. Take ADGB 31s trading unch/+0bp on two-way interest vs sellers of ADGB 70s closing -0.375pt/+3bp. Another indication of index related outflows is the outperformance of QATAR vs ADGB as the former isn't affected, QATAR 50s closed unch/+0bp. SHJGOV continues to underperform SHARSK, again indicative of EM dedicated outflows, SHJGOV 36s close -0.25pt/+2bp. One credit which has continued to grind tighter lately is MOROC though. Whilst not much seems to go through, accounts continue to look for bonds and the market is bidding them up.
MIDDLE EAST - MACRO / MARKETS
IMF unlocks USD2.3bn for Egypt, urges faster structural reforms. The IMF executive board completed the fifth and sixth reviews of Egypt’s Extended Fund Facility (EFF) and the first review under the Resilience and Sustainability Facility (RSF), enabling the immediate disbursement of about USD2.3bn and brining total financing under both programs to more than USD5.2bn. The fund highlighted notable improvements in Egypt’s macroeconomic conditions, with real GDP growth rising to 4.4% in FY2024/2025, inflation declining to 11.9% in January 2026, a narrower current account deficit supported by strong remittances and tourism, and foreign reserves increasing to around USD59.2bn by end-2025. Fiscal consolidation and exchange rate flexibility have strengthened market confidence and external buffers. However, the IMF emphasised that structural reform implementation has been uneven, particularly regarding divestment and reducing the state’s economic footprint. It called for faster progress on domestic revenue mobilisation, debt management, banking sector governance, and maintaining a market-determined exchange rate.
IMF sees accelerating recovery in Syria, expands reform support. An IMF mission to Damascus in February 2026 reported that Syria’s economy continues to recover, supported by improved consumer and investors sentiment, the return of refugees, increased electricity supply, easing sanctions, and gradual regional reintegration. Preliminary data show the 2025 budget ended with a small surplus, achieved without central bank financing, while inflation slowed to low double digits and the exchange rate strengthened under a tight monetary stance. The 2026 budget aims to boost spending on healthcare, education, wages, and infrastructure, while safeguarding social protection and improving fiscal transparency, public financial management. The IMF emphasised the need to strengthen central bank independence, rehabilitate banking sector, address legacy debts, and enhance financial supervision to restore trust and support sustainable growth. The fund will expand technical assistance in fiscal reforms, debt management, financial sector legislation, and statistical capacity, helping lay the groundwork for the eventual resumption of Article IV consultation.
