Most Gulf equity markets fell sharply on Sunday after joint US-Israeli strikes on Iran triggered retaliatory attacks across American-linked targets in the region, heightening fears of prolonged instability. In a rare move, Boursa Kuwait suspended trading until further notice, citing “exceptional circumstances.”
Witnesses reported fresh blasts near Dubai and over Doha for a second consecutive day, as Iran’s retaliation following the killing of Ayatollah Ali Khamenei disrupted major regional airports, including Dubai. The aviation halt marked one of the most significant interruptions to global air travel in recent years.
In Saudi Arabia, the region’s largest market, the benchmark index trimmed early losses but was still down 2%, compared to a 4.6% plunge earlier in the session. Major decliners included Al Rajhi Bank, Saudi National Bank and budget carrier flynas. Meanwhile, state oil giant Saudi Aramco rose 2.6% amid expectations of higher crude prices.
Analysts at Barclays raised their Brent crude forecast to around $100 per barrel, up from $80, reflecting rising geopolitical risk premiums. Market experts warned that while higher oil prices may provide short-term fiscal support for Gulf governments, disruption to shipping routes — particularly through the Strait of Hormuz — poses a broader threat to global energy flows and trade.
Elsewhere, Oman’s Muscat index narrowed losses to 1.8% after earlier falling more than 3%, while Bahrain’s index declined 0.9%. Qatar’s exchange remained closed for a bank holiday. Outside the Gulf, Egypt’s benchmark index dropped 5.5% in early trade as investors moved into risk-off mode.
With tensions escalating and uncertainty lingering over regional stability, analysts cautioned that further real-economy damage or shipping disruptions could deepen volatility across Gulf and emerging markets.