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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 falls on OPEC+ output hike concerns. Oil prices slipped at the start of the week, with Brent dropping below USD70/b and WTI near USD65/b, as expectations that OPEC+ may raise production again in November stoked fears of an oversupplied market. The alliance, led by Saudi Arabia, is considering boosting output by at least the same 137,000b/d already planned for October, though actual increases may be smaller due to capacity constraints among some members. While China’s robust crude purchases have provided a cushion, the group’s shift toward reclaiming market share rather than managing prices has raised concerns about long-term oversupply. The International Energy Agency projects a record glut by 2026 as OPEC+ revives idled capacity alongside rising non-OPEC production, while Brent is expected to slide further next year despite China’s stockpiling efforts.
Gold hits fresh record amid Fed uncertainty and US shutdown risks. Gold surged to a new all-time high of USD3,798/oz today, marking its sixth consecutive weekly gain, as traders weighed the risk of potential US government shutdown that could delay key jobs data and cloud the Fed’s monetary policy path. A shutdown would postpone Friday’s payroll report, which is expected to show subdued labour market growth, further bolstering the case for rate cuts at the October meeting. While divergent views among policymakers and stronger than expected economic data add uncertainty to the easing cycle, gold had already gained more than 40% this year, supported by central bank demand, Fed cuts, and inflows into gold-backed ETFs, which have reached their highest since 2022. Precious metals broadly rallied, climbing on persistent supply tightness, reflected in soaring lease rates and dwindling stockpiles in London.
MIDDLE EAST - CREDIT TRADING
End of day comment – 26 September 2025. A typical Friday which was on the quieter side despite the new ADGB which saw activity in the 10y holding the T+18bp issue spread with most bonds changing hands in a 99.20/25 range. The 3y though was very quiet and barely traded and is going out straddling the T+10bp issue spread. Away from this the market saw more selling in AD quasi sovereign names in the 5y area. MASDAR 30s, ADGABU 29s,30,31s ADNOCM 34s were all for sale and this market sector went out -0.25pt/+2bp on average. PCE and other US numbers had little impact on rates market and with prices unchanged in longer end bonds spreads also going out unchanged. In the financials we still see mainly sellers on a combination of spreads being tight in the front end and new issuance. EIBUH 30s, FABUH 28s,29s were some bonds on sale today and prices starting to drift a bit lower by 0.125pt. Recent new issues though held with some European retail interest in new QNBK 30s closing unch.
MIDDLE EAST - MACRO / MARKETS
Saudi Arabia’s FDI momentum strengthens. Saudi Arabia recorded a strong 14.5% y/y rise in net foreign direct investment (FDI) inflows in Q2 2025, reaching SAR22.8bn (USD6.1bn), underscoring the Kingdom’s ability to attract capital despite regional and global economic uncertainties. The increase reflects growing investor confidence in Saudi’s pro-business reforms, ranging from easing regulatory barriers to broadening foreign ownership limits, alongside country’s drive to diversify under Vision 2030. Sectors such as financial services, tourism, logistics, and technology are drawing particular interest, supported by mega-projects and ongoing privatisation initiatives. While global FDI inflows remain volatile, Saudi’s consistent performance highlights its positioning as a key emerging market destination. Going forward, sustained policy reforms, clarity on regulatory framework, and the Kingdom’s continued push to open the capital markets will be critical in maintaining momentum and meeting its long-term diversification targets.
S&P upgrades Morocco from BB+ to BBB- on reform momentum and resilient growth. Morocco’s economy has demonstrated resilience despite consecutive external shocks, with S&P upgrading its rating to BBB- with a stable outlook. Growth is forecast to average 4% annually between 2025 and 2028, supported by strong domestic demand, structural reforms, and buoyant sectors. Fiscal consolidation is expected to gradually narrow the budget deficit to 3% of GDP by 2026, lowering the debt ratio below 60% by 2028, while the current account deficit will remain constrained near 2% of GDP. Reforms in taxation, social security, and health coverage, alongside large scale investment programs are helping to diversify the economy, widen the tax base, and strengthen resilience. Strong export growth is offsetting import pressures from major infrastructure projects, while FDI inflows and IMF support bolster external buffers. Despite low per capital income, high unemployment, and vulnerability to climate change, Morocco’s consistent policy implementation, robust foreign reserves, and reform momentum underpin its improved creditworthiness and medium-term economic outlook.
