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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 slides as supply outlook and winter storm dampen prices. Oil prices eased as traders focused on abundant supply and the impact of a major US winter storm, with Brent near USD65/b and WTI sliding toward USD60/b. despite recent rallies, sentiment has been weighed by expectations that global oil output will continue to outpace demand, including Kazakhstan preparing to restart production at the Tengiz field and Chevron moving more Venezuelan crude into markets, keeping pressure on an already will-supplied market. At the same time, freezing conditions have temporarily disrupted Gulf Coast refineries and boosted natural gas volatility, though the effects are expected to be short-lived. Traders are also watching OPEC+ ahead of its weekend meeting, where members are widely expected to maintain current output levels, and monitoring geopolitical risks, particularly renewed threats from the US toward leadership, which add a modest risk premium to prices.
Gold hold above USD5,000/oz as safe-haven demand deepens. Gold continued to climb and held above USD5,000/oz for a second day as a weaker US dollar and sustained investor demand for safe havens extended a powerful rally driven by geopolitical risk and a broader flight from sovereign bonds and currencies. Gold rose as much as 1.3%, marking its seventh straight day of gains, with recent pressure on the dollar-partly tied to speculation around US support for the yen and tariff threats, making precious metals more attractive for global buyers. Silver also surged nearly 7% alongside gold’s gains. The precious metals rally reflects heightened market anxiety amid erratic policy actions, including trade threats and geopolitical tensions, and historic selloff in other assets that has reinforced gold’s role as a gauge of fear and a hedge against financial uncertainty.
MIDDLE EAST - CREDIT TRADING
End of day comment – 23 January 2026. Another mixed day. With more new issues announcements in Saudi and also in BHRAIN, the focus is drifting away from secondary markets in names not tapping the market. Flows remain subdued as a result. In IG names ADGB continues to outperform QATAR, especially in the long end ADGB had a gain strong bids closing 54s +0.5pt/unch. Against this there is selling into higher cash bids in QATAR, QATAR 50s closing +0.25pt/+2bp. Then we have seen some activity in SHARSK/ SHJGOV. The flow was mixed but definitely getting a bit more two way in interest, especially SHJGOV 36s and SHARSK 36s having buyers closing both +0.25pt/unch. OMAN was quiet but for choice had sellers in long end, 48s closing +0.125pt/+2bp. Quasi sovereign were quiet and with sticky cash prices and lower UST yields generically 2/3bp wider. On the primary market side again no new announcement in my GCC universe, the focus there remains the KSA complex.
MIDDLE EAST - MACRO / MARKETS
Aramco prices USD4bn bond sale to fund investments and dividends. Saudi Aramco priced a USD4bn bond offering, its first of the year, as the world’s largest oil producer increases borrowing to support major investments and hefty dividend pay-outs. The sale comprised four tranches maturing between three and 30 years, attracting strong demand with more than USD22bn of bids at its peak, and included long-term debt priced about 1.3ppts above US treasuries. The bond issue follow nearly USD17bn of debt sales over the past two years that have helped Aramco sustain its pay-outs amid weaker oil prices and production limits, and comes as the company plans to invest over USD50bn this year in oil and gas production while maintaining its high base dividend. Despite Brent trading well below the levels Saudi Arabia neds to balance its budget, Aramco’s gearing remains relatively low and it has signalled further debt issuance is likely as part of its broader financing strategy. Going forward, Aramco is expected to continue tapping debt markets to support capital spending and dividends, gradually increasing leverage while managing cash flows in a more challenging oil price environment.
Saudi Arabia set to remain a leading emerging market debt issuer. Fitch Ratings expects Saudi Arabia to remain among the largest US-dollar debt and sukuk issuers in emerging markets, with the Kingdom’s debt capital market projected to reach about USD600bn outstanding in 2026, driven by cross-sector financing needs, fiscal deficits, regulatory reforms, and expectations of lower oil prices and interest rates. Saudi Arabia was the largest dollar-debt issuer in EM (excluding China) in 2025 and also led ESG and sukuk issuance, with sukuk accounting for around 62% of outstanding debt. Foreign investor participation in local markets has increased following reforms, while banks are playing a growing role through subordinated sukuk issuance amid tighter domestic liquidity. Fitch notes that while the market benefits from strong investment-grade credit quality and diversified funding channels, it remains sensitive to oil prices, interest-rate volatility, evolving sharia requirements, and geopolitical risks that could influence funding costs and investor sentiment.
