Gulf stock markets slide as Middle East conflict intensifies, oil prices surge

Major stock markets across the Gulf region ended lower on Monday as escalating military tensions between the United States and Iran rattled investor confidence

Major stock markets across the Gulf region ended lower on Monday as escalating military tensions between the United States and Iran rattled investor confidence, while a sharp rise in global oil prices added to concerns over inflation and economic uncertainty.

Financial markets reacted nervously after Iran claimed it had closed the strategically important Strait of Hormuz, one of the world’s busiest energy shipping routes. The announcement raised fears of potential disruptions to global oil supplies, pushing crude prices sharply higher and prompting investors to move away from riskier assets.

The latest escalation followed a new round of U.S. military strikes carried out on Sunday. According to U.S. Central Command, American forces targeted dozens of military-related sites across several locations in Iran using precision-guided weapons. The operation marked another significant increase in hostilities between the two countries.

In response, Iran’s Revolutionary Guards announced on Monday that they had launched missile attacks against U.S. military bases located in Kuwait and Bahrain. The exchange of attacks has further heightened concerns that the conflict could spread across the wider Middle East, threatening regional stability and international trade.

Despite Iran’s announcement regarding the Strait of Hormuz, U.S. President Donald Trump stated that the vital shipping lane remained open for commercial traffic. His remarks came after Tehran claimed it had shut the waterway following an attack on a vessel it alleged had violated its designated maritime route.

The renewed confrontation has also cast doubt over the future of the interim agreement reached between Washington and Tehran last month. The deal had aimed to restore safe navigation through the Strait of Hormuz and create conditions for broader peace negotiations over a 60-day period. Analysts now fear that continued military action could derail diplomatic efforts and prolong regional instability.

Investor sentiment weakened across Gulf financial markets.

Saudi Arabia’s benchmark Tadawul index slipped 0.2%, with energy giant Saudi Aramco declining 0.5%, despite the rise in crude oil prices.

Dubai’s main stock index recorded the region’s biggest decline, falling 1.4%. The losses were led by a 2.6% drop in shares of Emirates NBD, while blue-chip property developer Emaar Properties lost 1.4%.

In Abu Dhabi, the benchmark index fell 0.5%, with Abu Dhabi Islamic Bank dropping 2.1% as investors remained cautious amid the growing geopolitical risks.

Meanwhile, the UAE Ministry of Defence confirmed on Sunday that the country’s air defence systems had been activated in response to a missile threat, underscoring growing security concerns across the Gulf.

Oil markets also reacted strongly to the developments. Brent crude futures surged $3.10, or 4.08%, reaching $79.11 per barrel during early trading, as traders priced in the possibility of supply disruptions through the Strait of Hormuz, a route that handles a significant share of the world’s oil exports.

Qatar’s stock market remained closed on Monday as the Qatar Stock Exchange suspended trading during the country’s official mourning period following the passing of His Highness the Father Emir, Sheikh Hamad bin Khalifa Al Thani.