Coverage: Q2 2026 · Information to 13 July 2026
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TGB Quarterly Regional Banking Monitor · 13 July 2026
Middle East crude oil shut-ins peaked in May and eased in June, when the United States and Iran signed a memorandum of understanding on 18 June to end the conflict and open the Strait of Hormuz, while Gulf central banks leaned on liquidity and capital relief, Egypt paused its easing cycle and Morocco held its key rate.
The desk view
The effective closure of the Strait of Hormuz from 28 February, when the conflict began, set the terms for MENA banking in the second quarter of 2026. The US Energy Information Administration (EIA) estimates that Middle East crude shut-ins peaked at 11.2 million b/d in May, and Brent averaged $117 a barrel in April before falling to $85 in June; on 18 June the United States and Iran signed a memorandum of understanding to end the conflict and open the strait. Gulf central banks responded with liquidity and capital relief, including a five-pillar package in the UAE and lower liquidity standards in Kuwait. Bank results so far show resilience: Al Rajhi Bank's first-quarter net profit rose 14% and QNB's half-year attributable profit 3.2%, although QNB doubled the downside weight in its parent-company credit-loss scenarios. Egypt paused its easing cycle with the overnight deposit rate at 19.00%, and Morocco held its key rate at 2.25%. The main risks are a resurgence of the conflict and the unwinding of temporary relief.
The regional picture
The second quarter of 2026 was dominated by the effective closure of the Strait of Hormuz. The strait had been effectively closed since the conflict began on 28 February 2026; on 18 June the United States and Iran signed a memorandum of understanding to end the conflict and open it. The EIA estimates that crude oil production shut-ins in the Middle East peaked at 11.2 million b/d in May and averaged 8.3 million b/d in June. Brent averaged $71 a barrel in February, $117 in April and $107 in May, before falling to $85 in June.
The loss of output was uneven across the Gulf. In May the EIA put crude shut-ins at 3,300 thousand b/d in Saudi Arabia, 3,190 thousand b/d in Iraq, 2,030 thousand b/d in Kuwait and 1,250 thousand b/d in the UAE, against February production of 10,500, 4,400, 2,560 and 3,600 thousand b/d respectively. Qatar and Bahrain lost 500 and 150 thousand b/d of crude output in May, against February production of 557 and 193 thousand b/d. By June the UAE's shut-in had fallen to 150 thousand b/d, or 4.2% of its February production, while Kuwait still had 64.5% of its February output shut in.