Gulf stock markets down, oil prices jump due to Iran conflict

Qatar’s stock market plunged on Monday while the ‌UAE suspended trading for two days, an early sign of economic disruption across the region due to the Iran’s conflict.

The UAE Capital Markets Authority said the Abu Dhabi Securities Exchange and Dubai Financial Market would remain shut on March 2 and March 3, citing its supervisory and regulatory role over the country’s capital markets.

In Qatar, the benchmark index — which was closed for a bank holiday on Sunday — dropped 4.3%, its biggest fall since March 2020. The country’s markets are open from Sunday to Thursday. The Gulf’s biggest lender by assets, Qatar National Bank, fell 4.8% - marking its biggest intraday fall since December 2022.

Qatar Islamic Bank declined 4.6%. HSBC cut its target price for the Sharia-compliant lender ​to 28.4 riyals ($7.79) from 29.4 riyals.

Elsewhere, maritime and logistics company Qatar Navigation tumbled 5.6% and LNG shipping company ‌Qatar Gas Transport retreated 6.7%.

Kuwait’s Index, which resumed trading after suspension on Sunday citing “exceptional circumstances”, trimmed early losses to 1.9% from 3.6%, with National Bank Of Kuwait losing 3.7%.

Market sentiment is likely to remain highly sensitive to regional geopolitical developments, with tensions driving near-term price moves. However, strong regional fundamentals and the relatively limited impact seen over the weekend may help cushion losses and cap downside, said Daniel Takieddine Co-founder and CEO, Sky Links Capital Group.

Saudi Arabia’s benchmark index finished flat in a choppy trade, a day after falling more than 2%.

Among fallers, ​budget airline flynas ‌tumbled 6.4%, to become the heaviest faller on the index.

However, oil giant Saudi Aramco advanced 1.5%, extending gains from the previous ‌session, when it rose 3.4%.

Oil prices jumped 7% to their highest levels in months on Monday as Iran and Israel stepped up attacks in the Middle East, damaging tankers and disrupting shipments from the key producing region.

Qatar halted production of liquefied natural gas on Monday and Saudi ‌Arabia shut its ‌biggest domestic oil refinery after a drone strike, Reuters reported citing a source, as Israeli and US strikes and Iranian retaliation triggered precautionary shutdowns of oil and gas facilities ‌across the Middle East.

Saudi stocks stabilized and may recover, supported by the energy sector as oil prices rise, with other sectors potentially remaining resilient. A sharper rebound - and spillover gains across the region - would be more likely if geopolitical risks ease quickly and the physical impact stays limited, said Takieddine.

Muscat’s index climbed 1.1%, while Bahrain stocks eased ​0.2%. The decline could persist if regional tensions intensify. However, because the sell-off is largely driven by geopolitical risk, markets could rebound quickly if tensions ease, said Joseph Dahrieh, Managing Director at Tickmill.

Outside the Gulf, Egypt’s blue-chip index fell 0.6%.

 Oil and gas prices surged, the dollar gained and shares slid on Monday as ‌the US-Israeli air war against Iran widened and looked set to last for weeks, threatening to upend a global economic recovery and perhaps reignite inflation. Brent crude was last up 9% ​at $78.9 a barrel, set for its biggest daily jump since 2020’s COVID-19-related turbulence and just surpassing its surge after Russia launched its full-scale invasion of Ukraine in 2022. Brent briefly topped $82.00 ‌at one stage, while US crude climbed 8.4% to $72.66 per ‌barrel. Safe-haven gold rose 2.1% to $5,389 an ounce. Israel launched new air strikes on Monday targeting Iran and expanded its military campaign to include attacks on Iran-backed Hezbollah militants in Lebanon, while Tehran fired missiles and drones at Israel, Gulf states and a British air base in far-away Cyprus. The air war is already having an impact on energy production. Qatar halted production of liquefied natural gas, Saudi Arabia shut its biggest domestic oil ‌refinery as a precautionary measure, and shipping has ground to a near halt in the Strait of Hormuz, through which a fifth of global oil supply flows. Benchmark European gas prices surged 37.5% to one-year highs.

For investors the crucial question is how long the war, and specifically the disruption to energy markets, will continue. US President Donald Trump signalled the US-Israeli military assault on Iranian targets could last four weeks.

“Historically markets have mostly shrugged off isolated conflicts in the Middle East. Only when the conflicts have had the potential to draw in the entire region have markets really moved,” said Michael Field, chief European equity strategist at Morningstar.

“For now, the market will be trying to ascertain how long the conflict will be likely to last and whether it will draw in other nations.” A prolonged spike in oil prices would risk reigniting inflationary pressures globally, while also acting as a tax on business and consumers that could dampen demand.

Reuters

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