Middle East Daily

Key arguments

• Oil held above USD 107/b and WTI near USD 102/b as Houthi forces advanced toward Mokha and the Bab al-Mandeb Strait, compounding existing Hormuz risks and raising fears of deeper Red Sea shipping disruption.
• Saudi crude production fell 1.9mb/d in August to 6.24mb/d, the lowest since 1990, with tanker-tracking showing exports down about a third to roughly 3mb/d; OPEC secondary-source estimates showed a smaller decline to 7.28mb/d, flagging wartime data uncertainty.
• Gold is heading for a third consecutive weekly loss near USD 4,315/oz after August PPI rose 0.4% m/m, with markets pricing around a 70% probability of a Fed rate hike at the September 16 FOMC and the US CPI release today seen as crucial.
• The CBRT held its policy rate at 37% after an effective 300bp of easing in late August, with MUFG expecting two 100bp cuts to 35% by year-end, though high energy prices or tighter global monetary conditions could delay and reduce the scale of easing.
• Middle East credit price action remains ugly, with new issues such as MASQUH 5y at 5.75% and 31s closing near 99.25 (about 0.25pt below reoffer), suggesting the spread repricing is not yet complete as higher-for-longer rates sink in.

Corresponding source evidence

1. Meanwhile, Saudi production has already fallen sharply amid constraints on both its Gulf and Red Sea export routes, while stronger Chinese crude buying is adding to market tightness.
2. With both Hormuz and Bab al-Mandeb facing intensifying security risks and little prospect of a near-term US-Iran truce, disruption to Saudi and wider Gulf exports could keep crude and refined-product prices elevated. · near-term
3. US producer prices rose 0.4% m/m in August, the strongest increase since May, reinforcing concerns that surging energy costs are feeding back into inflation as Middle East hostilities intensify.