Stock markets across the Gulf and broader Middle East saw sharp losses on Sunday as intensifying hostilities between Israel and Iran unsettled investors and spurred fears of a wider regional conflict.
Israel launched a series of strikes beginning Friday, targeting Iranian nuclear and military facilities. Officials in Tel Aviv have pledged a continued campaign to dismantle Iran’s nuclear ambitions. Iran, in turn, carried out retaliatory attacks and canceled scheduled nuclear talks on Sunday, which the U.S. had described as the “only viable path” to halting the military escalation.
The Saudi benchmark index (.TASI) closed down 1%, dragged by declines in major financial stocks. Al Rajhi Bank dropped 1.5%, and Saudi National Bank, the kingdom’s largest lender, fell 3.1%. However, Saudi Aramco gained 1.8%, buoyed by surging oil prices.
Oil prices rallied by 7% on Friday, as fears of supply disruptions gripped global markets. The conflict escalated further on Saturday when Israel reportedly targeted energy infrastructure in Iran, including a key offshore installation in the South Pars gas field, jointly operated with Qatar.
Qatar’s stock index (.QSI) plunged 3.2%, its steepest fall since April. Qatar National Bank slipped 4.2%, while Qatar Gas Transport Nakilat dropped 3.3%.
Kuwait’s exchange (.BKP) suffered a 3.9% loss, after trading was temporarily suspended due to a sharp intraday drop. Kuwait Finance House fell 3.7%, while Jazeera Airways shares crashed 18.4% amid growing regional airspace restrictions.
Outside the Gulf, Egypt’s EGX30 index slumped 4.6%—its biggest one-day drop in over a year. The market was led lower by Commercial International Bank, which dropped 4.3%, and EFG Holding, which tumbled 12.4%.
“Israel said it had targeted Iran’s nuclear facilities, ballistic missile factories and military commanders in strikes that started on Friday, in what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon,” Reuters reported.
Iran responded by launching over 100 drones toward Israel, while accusing the United States of complicity during an emergency UN Security Council meeting. Washington denied the claim and reiterated its call for diplomacy.
According to Bloomberg, Egypt suffered the region’s steepest loss, with its main index plunging 7.7% at one point—its worst performance since the COVID-19 outbreak. The selloff was attributed in part to fears that gas disruptions from Israel could strain Egypt’s energy supply.
The Strait of Hormuz, a critical chokepoint for global oil transport, has also drawn concern from traders. A full-scale conflict or blockade could send crude prices soaring to $120 per barrel, analysts warn.
In other markets:
- Bahrain’s BAX declined 0.8%
- Oman’s MSX30 shed 0.9%
- Muscat and Abu Dhabi markets also saw modest losses
With regional stability in question and key economic ties threatened, analysts predict heightened volatility across Middle Eastern exchanges in the coming days.