To read the full report, please download the PDF above.
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 weakens on India tariff tensions and surplus concerns. Oil prices fell as traders looked past US pressure on India to halt Russian crude purchases and focused instead on the risk of a supply glut building in the coming months. Brent slipped below USD68/b while WTI hovered near USD64/b, after US doubled import levies on Indian goods to 50% in retaliation for India’s continued buying of Russian oil. Despite the tariff hike, Indian refiners signalled they would maintain most of their purchases, highlighting limited immediate supply disruption. Broader concerns remain that OPEC+’s unwinding of supply cuts, combined with rising output from non-member producers, could tip the market into surplus. Although Brent’s prompt spread stayed in backwardation, suggesting near-term tightness, the gap has narrowed, reflecting weaker forward demand expectations. In the US, refinery activity slowed while Cushing stockpiles fell for the first time in two months, underscoring a mixed domestic picture. Going forward, oil market sentiment is expected to remain pressured averaging around USD63-65/b in late 2025, as global supply outpaces demand and inventories build.
Gold steady on Fed independence concerns. Gold prices held firm, supported by investor unease over the independence of the Fed and potential inflation risks in the US. Fed Governor Lisa Cook pledged to contest President Trump’s attempt to dismiss her over alleged mortgage document falsification, a move that, if successful, would give Trump a majority on the seven-member board and heighten concerns about political influence over monetary policy. Markets fear that reduced Fed independence could lead to premature interest rate cuts, eroding investor confidence and fuelling inflation.
MIDDLE EAST - CREDIT TRADING
End of day comment – 27 August 2025. Activity picked up today. Sellers to buyers ratio was 2:1 with ETF accounts providing supply throughout the day. RM flows were mixed, seen mostly sellers in QATAR which will be out of the EMBI index by the end of the month. Late afternoon saw a bout of short covering on the back of the UST recovery. Overall though the market is going out 2/4bp wider. In IG QATAR sovgn underperformed ADGB, QATAR 50s closing -0.5pt/+3bp vs ADGB 54s -0.25pt/+1bp. Quasi sovereign remain active in ADQABU and QPETRO with some selling across their curves and bonds 2/4bp wider, other names were quiet though. Financial bond prices remain glued closing unchanged but seen the first day since a while some selling from account side, most likely on the back of the Saudi bank issuance. Corps are starting to see more sellers, today mainly in ALDAR, closing 35s -0.25pt/+3bp. Since I am covering for Matt today saw the first new issue trading since the summer break. New BSFR 35s LT2 was not greeted well, bonds closed around 99.375 from 100 reoffer. Tomorrow wills see new Saudi Awwal (1.25bn/10NC5/T2/T+220bp) and Alinma (500mm/PNC 5.5/AT1/ 6.25%). Overall markets feel soft going out but spread and price moves are still very orderly. NVIDIA/GDP/PCE and month end is still ahead.
MIDDLE EAST - MACRO / MARKETS
Bahrain sees fourth consecutive month of deflation in July. Bahrain’s consumer prices dropped from -0.4% y/y in June to -0.9% y/y in July, marking the fourth consecutive month of deflation. The annualised deceleration extends a pattern of sustained price softness, though granular data remained undisclosed in recent summaries. The continued deflation signals ongoing pressures on sectors like food, housing, or apparel that typically drive consumer costs. As a result, the Central Bank of Bahrain may continue to closely monitor these trends for potential monetary or fiscal policy adjustments to support demand and avert prolonged deflation. Bahrain’s sustained inflation below the IMF’s stable projection of 1.0% for 2025 underscores the need to monitor price dynamics closely as the Kingdom balances its peg, financial stability, and economic growth objectives.
Jordan’s export momentum in H1 2025. Jordan’s exports recorded strong momentum in the first half of 2025, with national exports rising 9% to JOD4.4bn (USD6.2bn) and re-exports edging up 1.2% to JOD431 million (USD608 million), pushing total exports JOD4.8bn (USD6.8bn). Shipments to Greater Arab Free Trade Area partners surged 16.9% to JOD1.8bn (USD2.6bn), driven by stronger demand from Saudi Arabia, Iraq, and Syria, while exports beyond the Arab region also advanced, including a 16% rise to non-Arab Asian markets and 14% growth to the EU. Key sectors fuelling the expansion included apparel, fertiliser, and pharmaceuticals, supported by government initiatives, trade partnerships, and King Abdulla II’s economic diplomacy that opened new markets in Central Asia. Imports rose due to higher machinery, jewellery, and grain purchases, though oil imports declined, reflecting changing consumption patterns.
