EDWARD BELL
Head of Research
DIFC Branch – Dubai
T: +971 (4)387 5033
E: edward.bell@ae.mufg.jp

SOOJIN KIM
Research Analyst
DIFC Branch – Dubai
T: +971 (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 swings as markets weigh Iran diplomacy against renewed conflict risks. Oil prices continue to fluctuate between geopolitical signals that suggest a renewed Middle East conflict is imminent or that diplomacy could prevail. Brent futures rose to USD 116.50/b overnight before fading the gains and are testing lower in early trade today at around USD 114/b. WTI mirrored the move, getting up to more than USD 103.50/b before pushing lower today to around USD 101/b. US President Donald Trump has told media that the US is engaged in negotiation with Iran through intermediaries while Iran’s foreign minister said that the country would continue to “give diplomacy a chance.” In oil market fundamentals, the EIA reported a draw in US commercial crude inventories of 1.9m bbl last week along with a modest draw in strategic reserves. Gasoline inventories moved higher by nearly 4m bbl while there were draws across the rest of the barrel. US oil production bounced back by 723k b/d as the impact of hurricanes earlier this month faded, bringing total US output to 13.9m b/d. In gas markets, TTF futures broke above EUR 100/MWh overnight, sustaining a sharp upward move in October with prices on track for a near 40% gain in a single month.

Gold steadies ahead of key PCE inflation data. Spot gold prices showed some choppy moves around the FOMC overnight with no explicit pledge from Fed chair Kevin Warsh for further rate hikes but his statement that inflation was the main focus for the Fed has kept at least December in play for a hike along with most of another move priced in for March. Spot gold is trading at USD 4,040/troy oz, lower on the day but holding within the USD 4,000-4,100/troy oz range that has been in place for the last week. The next major catalyst for gold will be the PCE inflation release later today for September which is expected t to show an acceleration in core PCE to 3.1% y/y.

MIDDLE EAST - CREDIT TRADING

End of day comment – 28 October 2026. Very strong day, especially in spread terms. Overnight headlines about a new WSJ report that military action against Iran is likely post midterm had very little impact on price action. In fact, most of the UST weakness overnight and during the day was absorbed and in cases where we have seen more short covering today cash prices are even a touch higher. One segment was KSA/Aramco long end bonds where the market was looking to cover shorts closing +0.25pt/-6bp. Against this KUWIB was more subdued with new 36s active and closing -0.125pt/-3bp. In QATAR it was mostly short covering in new 36s (+0.125pt/-6bp) leading the curve tighter. In ADGB and OMAN the strong bid in long end bonds met only modest selling interest, ADGB 54s and OMAN 48s closed +0.25pt/-6bp. What is missing though is demand from account side. Whilst ETFs have flipped to being net buyers, international RM are if anything sellers into strength. What's also missing is the participation of more illiquid/ off benchmark names. We have seen again today a lot of sellers in AT1s which are still struggling to find clearing levels, marking the likes of EBIUH, MASQUH or FABUH perps 0.25pt lower. Heading into the FED macro is broadly flat. (Source: Dominik Roth, Credit Trader)

MIDDLE EAST - MACRO / MARKETS

GCC central banks hold rates steady following Fed’s policy pause. The US Fed held its benchmark interest rate at 3.75–4.00% on October 28, citing strong economic growth and persistently elevated inflation, with two policymakers dissenting in favour of a 25bp increase. Following the decision, the Central Bank of the UAE maintained its Base Rate at 3.90%, while its short-term liquidity borrowing rate remained at 4.40%. Other GCC central banks also kept rates unchanged, with Saudi Arabia’s repo rate at 4.50%, Qatar’s deposit rate at 4.10%, and Bahrain’s and Oman’s key rates at 4.50%. The pause provides temporary relief to regional financial institutions following rising funding costs, which have weighed on banking margins. Meanwhile, inflation remains uneven across the Gulf, ranging from 1.9% in Saudi Arabia to 3.2% in Oman, although dollar-pegged exchange-rate regimes continue to limit monetary policy independence.

UAE-Canada Trade Agreement expected to boost UAE GDP by USD 8.7bn by 2033. The UAE signed its first Comprehensive Economic Partnership Agreement (CEPA) with Canada, with the agreement expected to contribute approximately USD 8.7bn to UAE GDP and increase exports to Canada by USD 11.8bn by 2033. The agreement will liberalise approximately 99% of existing bilateral trade by value and 97% of tariff lines, supporting greater market access for goods, services and investment. Bilateral non-oil trade reached USD 4.2bn in 2025, up more than 22% y/y, with further growth of 18% y/y in H1 2026. Key beneficiaries include metals, pharmaceuticals, electronics and food products, alongside logistics, energy and manufacturing. The partnership also builds on USD 50bn in planned UAE investments in Canada, with an additional USD 15bn in trade and investment opportunities currently under negotiation. Future investment priorities include data centres, infrastructure and technology, while SMEs are expected to benefit from improved market access.