Gulf markets demonstrated extreme resilience despite the escalating conflict in the Middle East. As they did recently with the US’s strike against Iran, these corporations moved quickly. Brent crude futures have increased by 11% in the last two weeks. This spike comes on the heels of Israel’s military action against Iran and further underscores the rising volatility in oil markets. As regional investors struggled to address these issues, many regional markets experienced varied fortunes, led by high growth levels in Egypt and Qatar.
Brent and U.S. crude oil prices dropped sharply in the aftermath of Israel’s attack on Iran. This event brought new and important attention to the security of supply in the region. On Sunday, Saudi Arabia’s Tadawul opened trading almost half a percent higher but closed the session down by 0.3%. Egypt’s benchmark EGX30 was the star of the show, closing 2.7% up. Meanwhile, Qatar and Bahrain were up, advancing 0.2% and 0.3%, respectively.
Israel Equities were highly volatile today. The broader TA-125 index jumped 1.77%, while the blue-chip TA-35 index rose 1.5%. Separately, point out that stocks on Tel Aviv 25 index had an all-time high on Sunday. Further Changes Against the Trenches These changes come on the heels of a chaotic week. On Friday, prices fell 2% just before U.S. President Donald Trump authorized military action.
Market analysts have expressed their concerns about the geopolitical fallout of the recent U.S. moves. Fadi Arbid noted that investors may be pricing in a reduction of uncertainty regarding Iranian threats, stating, “The market might be priced in on removing a big overhang, which is the Iranian threat.” He continued that international investors would take the development as a good sign.
Edward Bell from Emirates NBD helped us understand the game-changing effect this could have on oil markets. He claimed that the U.S. attacks might be the beginning of a major escalation in the war. He highlighted that “oil markets are likely to take the U.S. attacks as a substantial escalation of the war and price in elevated security of supply risks.” He pointed out that oil flows from the Gulf continue to be unimpeded and that their infrastructure has not been hit by direct attacks. He cautions that markets are likely to keep reflecting a heightened geopolitical premium.
Giovanni Staunovo agreed with them, telling MarketWatch that oil prices would be set to open higher on the increased geopolitical risk. He stated, “Oil prices are likely to open higher, further increasing the geopolitical risk premium.”
Despite these turbulent conditions, the UAE has called for an immediate cessation of hostilities to prevent serious repercussions in the region. The Trump Administration has recently voiced frustration with the worsening state of hostilities between Israel and Iran and called for a peaceful settlement. In Bahrain, authorities issued a “work from home mandate” on Sunday, advising citizens to “only use main roads when necessary to maintain public safety.“
Tanker traffic has continued unabated in both directions through the Strait of Hormuz. This crucial worldwide shipping artery is an indispensable enabler of global oil supply. This relative stability has temporarily relieved the global community’s fears over an immediate disruption to oil markets.