Middle East 4

SOOJIN KIM Analyst Middle East Daily DIFC Branch – Dubai T: E: 30 July 2026

MUFG Bank, Ltd. and MUFG COMMODITIES / ENERGY Securities plc A member of MUFG, a global financial group Oil eases after US strikes focus on military targets. Brent crude fell toward USD89/b, while WTI traded near USD83/b, as markets assessed a new wave of US military strikes on Iranian military targets that stopped short of damaging critical civilian infrastructure. The US said it targeted dozens of Islamic Revolutionary Guard Corps (IRGC) facilities, including missile, drone and maritime assets, in response to attacks on US personnel in Jordan. Meanwhile, US commercial crude inventories fell to their lowest level since 2018, underscoring tightening physical supply, while around 13mb/d of Gulf oil exports continued to flow through the Strait of Hormuz and alternative pipelines. However, attacks on LNG vessels near Egypt’s Damietta port and ongoing threats to shipping in the Red Sea highlight persistent risks to regional energy infrastructure. While the limited scope of the US strikes helped ease immediate fears of broader supply disruptions, continued security risks across key shipping routes are likely to keep a geopolitical premium embedded in oil prices.

Gold holds gains after Fed keeps rates unchanged. Gold traded near USD4,060/oz after gaining nearly 1% as the US Fed left interest rates unchanged, reducing immediate pressure from higher borrowing costs despite persistent inflation risks. The Fed voted 9-3 to maintain rates, although policymakers signalled that further tightening remains possible if inflation stays elevated. Lower short-term Treasury yields following the decision supported bullion by reducing the opportunity cost of holding non-yielding assets. Meanwhile, renewed US strikes on Iran kept geopolitical tensions elevated, while the Fed’s decision has provided near-term support for gold, expectations of higher-for-longer interest rates, and persistent Middle East tensions are likely to keep the metal trading within a broad range around the USD4,000/oz level.

SAUDI ARABIA GDP TO SLOW DOWN FROM 4.6% TO 1.7% IN 2026 12

End of day comment – 29 July 2026. Despite the overnight trade-fire between US/Iran, the market started on a better tone, cash bids were higher in ADGB and sovgn bonds generally. Mid-morning though we started to see outflows from RM side across QATAR and UAE names without moving prices/spreads though. In the afternoon, the market started to drift to the left in cash and outflows accelerated with the general weak risk sentiment after Trumps 'hit hard' comment. Spreads still look 1/2bp tighter on average but follow the path 'unchanged on higher rates, wider on lower rates'. QATAR was active today with some selling in belly bonds, 30s closing -0.25pt/+2bp whereas long end found a bid in 50s closing unch/-2bp. MUBAUH got sold in quasis which looks like residual off index positions getting sold into month end, but with the curve up to 0.375pt lower, spreads just about held unch. Attention will now turn to the Fed, earnings and potential overnight military action. But with the weak technicals, the path of least resistance still seems wider. (Source: Dominik Roth, Credit Trader)

IMF: KSA remains resilient despite regional conflict. The IMF assessed that Saudi Arabia has demonstrated remarkable resilience despite the disruption caused by the Middle East conflict and the temporary near-closure of the Strait of Hormuz, supported by strong macroeconomic fundamentals, diversified oil export routes through the East- West pipeline, and continued implementation of Vision 2030 reforms. While the conflict has weighed on oil exports, trade, confidence, and non-oil activity, higher oil prices have more than offset lower export volumes, generating an oil revenue windfall. The IMF expects GDP growth to slow from 4.6% in 2025 to 1.7% in 2026, with non-oil growth moderating to 2.6% before recovering as maritime traffic normalises. It recommends maintaining prudent macroeconomic policies, including a modest reduction in the non-oil primary deficit, while keeping any fiscal support temporary and targeted. Over the medium term, the IMF emphasises…