Global stocks tumble, oil soars past $100 on Mideast conflict

Stock markets plunged and energy prices soared on Monday as supply disruptions from the Middle East war drove volatility and fanned inflation fears.

Oil prices rocketed above $100 a barrel for the first time since Russia’s invasion of Ukraine in 2022, as Iran carried out strikes against crude-producing Gulf nations.

Most Gulf markets fell in early on Monday trading, led by ‌sharp losses in the UAE, as the US-Israeli war with Iran continued and oil prices jumped more than ​10% on supply cuts and fears of prolonged Strait of Hormuz shipping disruptions.

Dubai’s main share index dropped 3.4%, falling for a fourth consecutive session, with blue-chip developer Emaar Properties falling 4.7% and top lender Emirates NBD was down 4.3%.

The index, which resumed trading on Wednesday after a two-day suspension, has fallen more than 12% over four sessions, leaving it down 5.5% for the year so far.

Budget airliner Air Arabia ​slumped 5%.

In Abu Dhabi, the index retreated 1.7%, its sixth session of falls, hit by a ‌4.9% slide in Abu Dhabi Commercial Bank.

The Dubai and Abu Dhabi exchanges said on Tuesday they would temporarily set the lower price limit for securities at minus 5%.

The cost of insuring against default on sovereign debt issued by several countries in the region rose sharply again on Monday.

Bahrain saw its five-year credit default swaps soar by 23 basis points from Friday’s close to 281 bps, the highest in more than three years, Egypt’s jumped 12 bps, and CDS for Saudi Arabia, ​Qatar, Abu ‌Dhabi and Dubai all gained 4 bps, data from S&P Global Market Intelligence showed.

Saudi Arabia’s benchmark index ‌fell 1%, set to snap a five-day winning streak, with Al Rajhi Bank losing 2% and Saudi Arabian Mining Company dropping 3.5%.

Elsewhere, Bahrain’s bourse declined 1.4%, while Kuwait’s lost 0.5%, and Oman’s advanced 3.2%.

Budget airline flynas fell 3.6%, while Saudi Aramco rose 0.3% ahead of its annual earnings report due on Tuesday.

Higher oil prices could ‌boost revenues for ‌Saudi Arabia and other Gulf Cooperation Council producers, supporting budgets and local economies if elevated levels persist, said Daniel Takieddine, co-founder and CEO, ‌Sky Links Capital Group.

However, disruptions in the Strait of Hormuz may cap the upside by slowing shipments and curbing output, though the UAE and Saudi Arabia remain relatively better positioned thanks to pipeline infrastructure that allows part of their crude exports to continue, added Takieddine.

The Qatari index lost ​2.5%, with almost all constituents in negative territory, including the Gulf’s biggest lender by assets, Qatar National Bank, which fell 2.7%.

The discussions come as maritime traffic in the Strait of Hormuz − through which a fifth of global crude passes − has all but halted since the war began on February 28.

European stocks moved sharply lower nearing midday deals, and gas prices on the continent remained elevated after soaring as much as 30 per cent at the open.

“The rise in petrol costs is acting as a major drag on equity prices and if oil prices continue to move higher this week, then the pumps will move with it,” Brooks said.

“The cost of living crisis is back, and it makes global rate cuts unlikely in the coming months,” she added.

The Paris stock market shed around two per cent, while Frankfurt was down 1.6 per cent and London lost 1.2 per cent, with energy and defence stocks among the few gainers.

The prospect of interest rates being kept elevated, or even raised to combat inflation, pushed government bond yields higher.

In Asia, Seoul, one of region’s best performers this year thanks to a tech rally, closed down six per cent, while Tokyo shed more than five per cent and Taipei fell more than four per cent.

Hong Kong and Shanghai also closed sharply lower.

Michael O’Rourke, chief market strategist at JonesTrading, warned that the pain for investors could last for some time.

“The worst is yet to come in the stock market reaction,” he said. “I would expect more of a risk-off mood until we get some tangible positive news.” US President Donald Trump said at the weekend that the price spike was a “small price to pay” to eliminate Iran’s nuclear threat, as the war showed no signs of easing.

Iran marked the appointment of Ayatollah Mojtaba Khamenei to replace his father as its supreme leader with a new barrage of missiles against Israel and the Gulf states at the start of the week.

International benchmark Brent and the main US oil contract WTI both rose close to 15 per cent nearing midday in Europe, having spiked around 30 per cent.

“The spike in the oil price is dominating global financial markets,” said Kathleen Brooks, research director at trading group XTB.

Further dousing hopes for peace, Iran on Monday designated Mojtaba Khamenei as supreme leader to succeed his ‌father Ali Khamenei, signalling that hardliners continue to dominate power.

Energy markets are particularly nervous because the crisis is unfolding around the Strait of Hormuz, through which roughly one-fifth of the world’s oil supply normally passes.

Agencies