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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 holds steady as peace talks raise prospect of restored Russian supply. Oil prices stabilised after hitting a one-month low, as growing momentum toward a Ukraine peace deal increased the likelihood that sanctions on Russian crude could eventually ease just as the market heads into a heavy surplus. Brent hovered near USD63/b and WTI stayed above USD58/b after yesterday’s slide, with US President Trump noting that only a few disagreements remain in negotiations. While Russia’s crude exports have been constrained by western sanctions, major buyers such as China, India, and Turkey have continued taking discounted volumes, making the potential market impact of lifted curbs uncertain. The broader backdrop remains bearish, with global supply rising sharply as OPEC+ and other producers ramp up output, while weak demand has driven prices down more than 20% since mid-June. The International Energy Agency (IEA) expects a record 4 million b/d surplus next year.
Gold rises as rate-cut expectations build on softer US data. Gold climbed toward USD4,165/oz, lifted by a weaker dollar and rising confidence that the Fed will cut interest rates before year-end. The latest batch of delayed US data strengthened the case for easing, with September retail sales showing signs of fatigue after months of strong consumer spending and confidence posting its steepest drop since April. The prospect of a policy shift gained additional traction as Kevin Hasset, widely viewed as the frontrunner to become the next Fed chair, is seen as aligned with President Trump’s support for lower borrowing costs. Gold has held comfortably above the USD4,000 mark, after retreating from its record high above USD4,380/oz last month and remains up more than 55% this year, supported by sustained central bank purchases and robust investor demand driven by currency-debasement concerns.
MIDDLE EAST - CREDIT TRADING
End of day comment – 25 November 2025. Another weak day, flows were skewed to selling all day. The selling came from RM and ETFs and there seems no appetite from dealers to put good bids behind selling requests, so a lot of requests become repetitive in the hope of a different outcome. Some select bonds are starting to see buyers though into the close, the spread widening has been persistent over days and some value starts to show with spreads anywhere from 10/15bp wider over a week. Today on average we close 3/4bp wider. Sovgn IG bonds held in cash price terms with again stronger bids in QATAR than in ADGB but broadly with cash unchanged these two curves close +3/4bp. Higher beta saw OMAN long end widening today, as I mentioned in previous comments so far high betas haven't underperformed but it feels from here if the widening continues they might start to. OMAN 48s closed -0.5pt/+6bp. Quasi sovereign were mixed, MUBAUH was the most active name closing +3/4bp with some selling in the 10y area like 5.294 34s closing -0.125pt/+5bp. Fins had sellers in new issues and AT1s, the only outperformer remains FABUH 5.875 perps which traded mostly around 100.75 (+0.125/+1bp).
MIDDLE EAST - MACRO / MARKETS
GCC banks maintain stability despite rising external funding and event risks. As per recent S&P Global publication, GCC banks are expected to maintain stable credit fundamentals in 2026, supported by steady profitability, solid asst quality, and strong capitalisation, even as geopolitical uncertainty and potential oil price weakness remain key downside risks. About 90% of bank ratings across the region carry stable outlooks, reflecting confidence in continued sovereign support where capacity allows. Lending growth will remain two-paced, with Saudi Arabia and the UAE benefiting from non-oil sector expansion, while Qatar, Bahrain, and Kuwait face softer credit dynamics. Asset quality indicators have reached cyclical highs, though rapid loan growth in recent years and exposures to Turkey and Egypt introduce pockets of vulnerability. External funding reliance is increasing, particularly in Saudi Arabia, Bahrain, and Qatar, but robust liquidity buffers and history of government backstops mitigate systemic risks. Profitability may dip slightly due to expected US rate cuts, yet banks continue investing in digitalisation, AI, and efficiency improvements. Capitalisation remains strong despite a gradual rise in hybrid instruments, and S&P expects GCC governments to remain supportive of systemically important banks if needed.
ADNOC holds USD150bn spending plan as global expansion accelerates. ADNOC will maintain its USD150bn investment plan over the next five years as it continues expanding production capacity at home and scales up its international footprint through its fast-growing investment arm, XRG. The unit has more than doubled its enterprise value to USD151bn in just a year, acquiring stakes in ADNOC’s listed companies, securing LNG contracts in the US and Africa, and buying into Mediterranean gas fields. ADNOC's board also reaffirmed the long-term goal of boosting national oil capacity to 5mb/d from 4.85mb/d, even though OPEC+ quotas limit actual production to around 3.4mb/d.
