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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 rises on renewed Iran tensions despite oversupply concerns. Oil advanced for a third consecutive session as President Trump warned Iran to strike a nuclear deal or face potential military action, injecting a fresh geopolitical risk premium into prices. Brent traded around USD69/b its highest level since September, while WTI hovered near USD64/b, with traders increasingly hedging against the risk of unrest in the Middle East through bullish options. Concerns centre on the possibility that a US-Iran confrontation could disrupt crude flows or shipping through the Strait of Hormuz, a key artery for global oil and LNG supplies. Still, the rally is unfolding against backdrop of ample global supply, with rising output from countries such as Brazil and Guyana expected to weigh on prices later this year, limiting the upside despite heightened geopolitical tensions.
Gold breaks above USD5,500/oz as liquidity crunch and dollar weakness supercharge rally. Gold surged to a fresh record above USD5,500/oz, extending a nine-day rally driven by a weaker US dollar, thin market liquidity and an intensifying flight from sovereign bonds and currencies. Gold jumped more than 3% in one session, following its largest daily gain since March 2020, as geopolitical tensions, concerns over Fed independence and expectations of a more dovish policy outlook reinforced the debasement trade. Market dynamics were further amplified by technical factors, including a gamma squeeze that forced dealers to buy futures in a tight market. Silver also hit new all-time highs, prompting margin increases and regulatory scrutiny in key markets. Overall, the move underscores growing investor unease over fiscal sustainability, policy uncertainty and global geopolitical risks, with precious metals increasingly seen as the preferred hedge.
MIDDLE EAST - CREDIT TRADING
End of day comment – 28 January 2026. Another quiet trading session ahead of the FED and tech earnings. Flows remained mixed but seen a bit more RM de-risking ahead of the macro events, mind Iran might come into play as well. Most bonds closed unchanged in cash and about 1/2bp tighter with some volatility in Z spreads around the swap spreads move. ADGB still is the strongest name, buyers of 54s (-0.125pt/-2bp) and 35s (unch/-2bp) are keeping the curve bid. Against this still seeing selling in QATAR long end where 48s closed -0.5pt/+1bp. Oman long end also continued to be offered in the morning but stabilised a bit in the afternoon 48s closed -0.375pt/+1bp. In the corporate space new Aldar 56s hybrid found a clearing level today at 98.95 and seem to find a base. All eyes now on the FEDs presser assuming no policy actions.
MIDDLE EAST - MACRO / MARKETS
Gulf central banks maintain policy rate in line with Fed decision. Gulf central bank kept their key interest rates unchanged after the US Fed opted to hold policy rates steady, underscoring their commitment to monetary stability under dollar-pegged exchange rate frameworks. The Central Bank of the UAE (CBUAE) confirmed that the base rate applicable to the overnight deposit facility will remain at 3.65%, a level anchored to the Fed’s interest rate on reserve balances, which continues to guide the overall monetary policy stance and set an effective floor for overnight money market rates in the country. The CBUAE also kept the rate for borrowing short-term liquidity through all standing credit facilities unchanged at 50bps above the base rate, reinforcing policy transmission and liquidity management. Similarly, the Central Bank of Bahrain (CBB) decided to maintain its overnight deposit rate at 4.25% following its periodic review, citing the need to preserve monetary and financial market developments. In Qatar, the Qatar Central Bank (QCB) also opted to hold rates steady after evaluating domestic economic and monetary conditions, keeping the deposit rate at 3.85%, the lending rate at 4.35%, and the repo rate at 4.10%, which is used for short-term liquidity operations. The Fed’s decision itself was not unanimous, with two governors factoring a rate cut while the majority supported holding rates unchanged.
Gulf partnership accelerates voluntary carbon market development. A strategic collaboration between Qatar’s Global Carbon Council (GCC) and Saudi Arabia’s Regional Voluntary Carbon Market Company is reshaping the Middle East’s environmental finance landscape by integrating high-integrity carbon credit certification with institutional-grade trading infrastructure. The partnership links GCC’s internationally recognised standards with the Saudi platform backed by the Public Investment Fund (PIF)and Tadawul Group, creating a unified and liquid marketplace for large-scale carbon offset trading across the Gulf. Early uptake has been strong, with more than 600,000 tonnes of verified credits traded in the first month, highlighting growing demand for transparent, credible offsets. The initiative strengthens the region’s decarbonisation efforts, supports compliance with global climate commitments, and positions the Gulf as an emerging hub for voluntary carbon markets that can attract international capital.
