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 extends losses on glut fears and Gaza peace prospect. Oil fell for a second straight session, with Brent slipping below USD68/b and WTI near USD63/b, as traders weighed the risk of a looming supply glut and tentative steps toward ending the Gaza conflict, which could reduce the war premium in prices. Brent’s 3.1% drop on Monday marked its steepest decline in nearly two months. OPEC+ is expected to agree on a modest output hike for November at its meeting this Sunday, continuing its strategy of gradually restoring supply. Meanwhile, the US and Israel announced a 20-point framework to end the Gaza war, though prospects remain uncertain without Hamas’ involvement. Futures are set for a modest monthly loss, with the International Energy Agency warning of a record surplus next year as both OPEC+ and non-OPEC producers add barrels. Going forward, oil prices are likely to remain pressured by rising supply and lingering concerns of oversupply, with geopolitical risk offering only limited support unless tensions escalate further.
Gold hits fresh record on Fed uncertainty and US shutdown fears. Gold climbed to a new all-time high of USD3,867.25/oz today, as the threat of US government shutdown clouded the Fed’s policy outlook ahead of its next rate decision. Fears that a shutdown could delay key economic data releases have boosted demand for safe havens, with gold already up more than 45% this year on strong central-bank buying and Fed rate cuts. Prices are on track for a third straight quarterly gain, supported by record ETF inflows. US treasuries also advanced on shutdown concerns, with lower yields and a softer dollar adding momentum to gold. Meanwhile, silver and platinum paused after sharp multi-year rallies though both remain up over 60% YTD amid tightening supplies and rising lease rates that reflect dwindling stockpiles in London.
MIDDLE EAST - CREDIT TRADING
End of day comment – 29 September 2025. Weak day overall. Especially in terms of spreads we have seen some more pronounced widening. Sellers outstripped buyers by a ratio of 2:1. On top of it interdealer flows are also initiated by dealer selling. The typical buyers like locals and RM seem to be preoccupied in the primary markets and it overall feels with the latest issuance that technicals are slowly turning negative. To be sure the weakness is mostly in the 5y area where spreads had been squeezed and yields are low. Quasi sovereign in that maturity bracket like ADNOCM, MASDAR, QPETRO are about 0.125pt lower and 5bp wider. Against this there is still some buying in long end though and cash prices are higher for duration bonds, take QATAR 50s closing +0.25pt/+2bp. In the higher beta space OMAN is starting underperforming led by the belly, this was again the most squeezed area and is starting to normalise, take 29s closing -0.25pt/+10bp. MOROC was upgraded by S&P to investment grade over the weekend, but here as well much was in the price already. After a pop in long end bonds in the morning the market faded and came back to nearly unchanged, 50s last trading at 74 (+0.5pt/-1bp). Overall it feels the recent new issuance is starting to take its toll on secondary buying flows. That said the 'correction' of the last 2/3 days pales against the tightening we have seen heading into Q4. Macro markets also remain risk supportive, but for now lower UST yields will mean wider spreads in GCC.
MIDDLE EAST - MACRO / MARKETS
Arab world secures USD351bn in renewable energy investments. The Arab region attracted 360 foreign renewable energy projects between 2003 and 2024, drawing more than USD351bn in investment and creating 83,000 jobs according to (Dhaman). Egypt, Morocco, the UAE, Mauritania, and Jordan led the way, accounting for nearly 70% of projects and USD291bn in investments. The UAE was the top destination, securing 57 projects worth USD88.5bn and over 16,000 jobs. At the corporate level, Saudi’s ACWA Power led in project numbers (20), while UAE's Infinity Power ranked first by value (USD34bn). Cross-border ventures, mainly by Saudi Arabia, the UAE, Bahrain, Jordan, and Egypt, totalled USD113bn. Looking ahead, power generation is expected to grow 4.2% in 2025, led by Saudi Arabia, Egypt, and the UAE, while electricity and equipment trade reached USD39.2bn in 2024, dominated by Gulf states.
IMF urges Lebanon to strengthen 2026 budget strategy. An IMF mission visited Lebanon from September 22-25 to review economic developments and discuss reforms, focusing on banking sector rehabilitation and the 2026 government budget. The IMF noted that Lebanon’s economy has shown partial resilience, supported by diaspora tourism, tight fiscal and monetary policies, and modest reserve accumulation. Progress was highlighted in establishing regulatory authorities for electricity and telecoms, strengthening fiscal statistics, and improving tax compliance systems. However, the IMF stressed that comprehensive reforms remain essential to address long-standing structural weaknesses, attract international support, and enable reconstruction. Engagement will continue during the October 2025 IMF Annual Meetings, as the Fund reiterated its commitment to support Lebanon’s reform agenda.
