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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 pulls back as risk-off mood and stronger dollar offset Iran premium. Oil prices fell after a three-day rally as a broad risk-off shift hit equities and metals while the dollar strengthened, prompting profit-taking in crude markets. Brent slipped back below usd70/b after briefly topping that level for the first time since July, while WTI dropped toward USD64/oz. Despite the pullback, Brent is still on course for its strongest monthly gain since July 2023, underpinned by a rising geopolitical risk premium linked to President Trump’s escalating threat against Iran, including warnings of potential military strikes if Iran fails to agree to a new nuclear deal. Market focus remains on the Strait of Hormuz, a critical chokepoint for global oil and liquified gas flows, after reports that Iran warned vessels it plans to conduct live-fire military drills in the area, underscoring the fragility of sentiment despite expectations that ample global supply could weigh on prices.
Gold slides as stronger dollar and Fed chair speculation hit prices. Gold fell sharply after its first decline in nearly two weeks as the US dollar strengthened on reports that President Trump is preparing to nominate Kevin Warsh as the next Fed chair. Gold dropped as much as 4.8%, reversing earlier gains and extending volatile trading that followed a record-breaking rally, while a firmer dollar made precious metals more expensive for most buyers. Warsh, seen as an inflation hawk despite recently advocating lower rates in line with Trump’s view, is expected to be formally named imminently, adding uncertainty around the future direction of US monetary policy. Broader political uncertainty in Washington has also kept investor sentiment fragile, even as a near-term US government shutdown was narrowly avoided through a tentative bipartisan agreement.
MIDDLE EAST - CREDIT TRADING
End of day comment – 29 January 2026. The market closed considerably wider in spreads today on a mix of souring risk sentiment and outflows. Especially ETFs were on the sell side today. To be sure prices continue to be sticky and this has been the case for a while now. But nothing has closed higher in cash price today and the market feels like having risk to sell. Those areas like 5/10y IG bonds closing unch in cash price are 3/4bp wider. Then the weaker part of the market close 4/6bp wider. That's long end bonds in IG, even stronger names like ADGB 54 closing -0.375pt/+4bp. Higher beta names like OMAN were under pressure from the start of day, even the belly closed lower in cash with 32s -0.25pt/+7bp, long end was about 0.5pt lower/+6bp. Primary markets in my space had FABUH pricing a 750mm 5y Formosa bond at SOFR +75bp. DAMAC is printing a 600mm 3.5y sukuk at 6.125%. Macro risk markets are moving fast, but GCC cash in my universe feels like having bonds to go regardless, so the path of least resistance looks wider.
MIDDLE EAST - MACRO / MARKETS
Saudi Arabia targets USD64bn under new National Privatisation Strategy. Saudi Arabia has launched a National Privatisation Strategy at attracting USD64bn in private-sector investment by 2030, reinforcing its push to expand public-private partnerships (PPPs), improve infrastructure and public services, and support sustainable economic growth under Vision 2030. Building on the 2018 Privatisation Programme, the strategy, implemented by the National Centre for Privatisation and Public-Private Partnership (NCP), seeks to position the Kingdom as a global benchmark for infrastructure privatisation and PPP delivery by unlocking state-owned assets, privatising selected government services, and reducing the state’s operational role. Implementation is underpinned by five core programme covering impact-based planning, regulatory and governance reforms, human capital development, market development, and project execution. By 2030, the strategy targets 221 PPP contracts, USD11.5bn in value-for-money gains, USD7.2bn in net government revenue, and thousands of jobs, with 147 investment opportunities drawn from more than 500 projects across 18 sectors. The forward PPP pipeline includes major projects in water, transport, healthcare and social infrastructure, building on earlier privatisation efforts that generated a pipeline of over USD213bn in projects and nearly 90 signed contracts.
Bahrain and Kuwait December CPI shows further disinflation. Inflation data for December 2025 point to generally subdued price pressures in both Kuwait and Bahrain heading into early 2026, reinforcing the narrative of contained inflation across much the GCC. In Bahrain, CPI declined from 1.1% y/y to 0.5% y/y, pointing to weakening price momentum and reflecting softer domestic demand moderation across key consumption categories. Meanwhile, Kuwait’s CPI edged lower from 2.5% y/y to 2.4% y/y, confirming a gradual disinflation trend and continued price stability supported by the dinar’s currency framework and contained cost pressures. Overall, the December readings underscore benign inflation conditions across both economies, reinforcing the view that near-term inflation risks remain limited as the region enter 2026.
