Most Gulf markets ended lower on Monday as reciprocal U.S.-Iran strikes kept investors on edge despite an interim peace agreement. Uncertainty over the durability of the June 17 deal pushed crude prices higher before gains were surrendered, while Saudi Aramco resumed crude loadings at its Ras Tanura terminal.
According to Reuters, most Gulf markets ended lower on Monday as reciprocal strikes by the U.S. and Iran in recent days kept investors on edge despite an interim peace agreement between the two countries to stop further attacks. The renewed push for diplomacy in the Middle East followed several days of retaliatory strikes triggered by an Iranian projectile that hit a cargo vessel in the Strait of Hormuz last week. Both sides have since accused each other of violating an interim ceasefire.
Market Declines Across Saudi Arabia and the UAE
Saudi Arabia’s benchmark index dropped 1.1%, with most of its constituents posting losses, according to Reuters. The country’s biggest lender, Saudi National Bank, fell 2.2% after announcing its intention to redeem its $1.25 billion additional tier 1 sukuk. Oil giant Saudi Aramco slipped 1.8% a day after snapping an eight-session losing streak. Meanwhile, Aramco resumed crude oil loadings on Friday at its Ras Tanura terminal, west of the Strait of Hormuz, after they were halted for nearly four months as oil producers ramped up output and exports ahead of an interim deal.
In the United Arab Emirates, Dubai’s main share index eased 0.4%, with top lender Emirates NBD and budget airline Air Arabia each losing 1.1%. In Abu Dhabi, the index was down 0.4%, hit by a 1.1% drop in Abu Dhabi Islamic Bank and a 1.7% decline in the UAE’s largest lender, First Abu Dhabi Bank.
George Pavel, general manager at Naga.com Middle East, said, according to Reuters, that while regional uncertainty could continue to weigh on trading activity in the near term, the UAE’s resilient economic fundamentals and strong corporate earnings could help limit downside risks and support a rebound once geopolitical concerns begin to subside.
Interim Peace Terms and Crude Price Volatility
The 14-point interim peace agreement, reached on June 17, was intended to stop the fighting that began after U.S. and Israeli action on February 28, reopen the strategically vital Strait of Hormuz, and allow negotiations to continue on issues including Iran’s nuclear programme. Uncertainty over the peace deal’s durability pushed oil prices higher, although crude has since surrendered nearly all of its war-related gains as markets rapidly reassessed the likelihood of easing supply pressures, Reuters reported.
Outside of Saudi Arabia and the UAE, the Qatari index fell 0.4%, with energy and real estate stocks leading the losses. Qatar Gas Transport fell 2.3% and Industries Qatar slipped 0.8%. Further afield, Egypt’s blue-chip index was down 1%, weighed down by a 2.3% loss in Commercial International Bank and a 2.9% fall in Eastern Company.
Ongoing Diplomatic Negotiations and Regional Monitoring
With both Washington and Tehran accusing each other of violating the interim ceasefire, market participants continue to monitor the durability of the 14-point peace deal agreed upon on June 17. The reopening of Saudi Aramco’s Ras Tanura terminal on Friday after a four-month stoppage marks a tangible return to export activity, even as regional indices reflect lingering investor caution following last week’s Strait of Hormuz projectile incident.
