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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 ahead of renewed US-Iran nuclear talks amid ongoing tensions. Oil prices held steady, with Brent trading just under USD71/b and WTI near USD65/b, as traders digested news that the US and Iran have agreed to continue nuclear negotiations next week in Vienna following recent talks in Geneva, even as a large American military deployment in the Middle East keeps geopolitical risk premium elevated. Iranian officials described progress in the latest discussions, but sources familiar with the US position said American negotiators left disappointed, and markets remain on edge over the potential for conflict that could disrupt regional supply. Despite some cooling from this week’s sessions, crude prices remain higher this year as concerns about geopolitical risks help counter broader expectations of a global supply surplus, and traders are also watching an upcoming OPEC+ meeting for signals on future production policy.
Gold edges higher as US-Iran talks continue amid military tensions. Gold rose slightly toward USD5,200/oz and remained on track for a weekly gain after the US and Iran agreed to continue nuclear negotiations next week, even as a significant American military buildup in the Middle East kept geopolitical risks elevated. While mediator Oman described “significant progress” in the latest round of talks, US officials reportedly expressed disappointment, underscoring lingering tensions. Gold has gained about 20% this year supported by geopolitical and trade uncertainty, concerns over Fed independence, and the broader shift away from currencies and bonds. Investor demand has also strengthened, with inflows into gold-backed ETFs offsetting earlier outflows. Markets are additionally monitoring signals from Fed officials on potential rate cuts, which could further influence gold’s trajectory.
MIDDLE EAST - CREDIT TRADING
End of day comment – 26 February 2026. There is an air of risk off in the market. GCC bonds felt heavy from the start. The long end was heavy given the selling in the days before and belly/shorter maturities started a bit on the back foot as well. Overnight ADGB announced a new 5y and 10y deal which will price at T+20bp and T+25bp respectively which is pricing the new bonds through the 5y curve and flat to the 10y area. 35s closed -0.25pt/+4bp on the back of the announcement. Away from ADGB prices were anywhere from unchanged to 0.25pt lower in the main names which is putting spreads 1/3bp wider on the day.
MIDDLE EAST - MACRO / MARKETS
Abu Dhabi raises USD3bn in first 2026 bond sale. Abu Dhabi raised USD3bn through a dual-tranche dollar bond sale, issuing 5- and 10-year notes, in its first debt offering of the year, attracting more than USD12.7bn in orders amid strong investor demand. The bonds were prices at 20 and 25bps above US Treasuries, tighter than initial guidance, reflecting favourable market conditions and the emirate’s strong credit profile. Rated AA by S&P and Fitch, Abu Dhabi maintains a low debt-to-GDP ratio of 17.4%, well below peers, even as borrowing by government-related entities is expected to rise to support economic diversification plans. The issuance comes amid active Gulf and emerging market sovereign borrowing, while JPMorgan’s planned removal of the UAE from its EM bond indexes may cause brief underperformance, though demand from developed-market investors is expected to cushion the impact. The successful issuance also supports Abu Dhabi’s broader strategy of funding economic diversification at favourable costs while maintaining prudent debt levels.
Kuwait’s recovery gains momentum, reform drive key to long term sustainability. The IMF’s Article IV consultation highlights that Kuwait’s economy is recovering, supported by the gradual unwinding of OPEC+ production cuts and solid non-oil growth, while inflation continues to moderate. Real GDP expanded by 1.7% y/y in Q2 2025, driven by 3.1% non-oil growth, and is projected to accelerate to 3.8% in 2026, with inflation easing toward 2% over the medium term. Despite the rebound, lower oil prices have weakened fiscal and external balances, with budget deficits expected to widen to around 9% of GDP and the current account surplus gradually narrowing, although external buffers remain strong and financial stability is intact. The IMF emphasised that achieving durable, diversified growth under Kuwait’s Vision 2035 will require sustained fiscal consolidation of about 1% of GDP annually, expansion of non-oil revenues thorough broader corporate taxation and stronger public financial management framework. Structural reforms are seen as critical to strengthening long-term fiscal sustainability, intergenerational equity and economic resilience.
