2 days Ago
(Bloomberg) -- Main equity benchmarks in Middle East countries including Saudi Arabia sank the most since 2020 on Sunday as investors reacted to the risks of a fresh global trade war and depressed oil prices. Stocks on the kingdom’s main exchange fell as much as 6.1%, while gauges in Qatar and Kuwait dropped more than 5.
5%. Equities in Tel Aviv dropped the most since October 2023, when Hamas launched the deadly attack on Israel that sparked the start of the war in Gaza. All four stock markets were closed on Friday.
Saudi Aramco — the world’s biggest oil exporter — was one of the biggest losers in the region. The company at one point erased more than $90 billion from its market capitalization. Regional losses mounted following the global market rout that began last week after US President Donald Trump rolled out the highest tariffs in over a century on its trading partners.
Investor anxiety and the threat of further declines across asset classes remain high after China retaliated with its own tariffs on Friday. That adds to risks of a broader trade war and tit-for-tat measures that may roil supply chains and slow economic growth. “In the short term, regional stock markets in the GCC are not immune to global sentiment,” said Fadi Arbid, founding partner and chief investment officer at Amwal Capital Partners Limited.
“We have seen it many times in the past like the global financial crisis, Covid, etc. The correlation is there.” Further threatening stocks in the Middle East is the potential for a sustained period of lower oil prices.
Brent crude tumbled 13% on Thursday and Friday as OPEC added to market chaos with a plan to boost supply by triple what was originally intended in May. The surprise boost, combined with demand pressure from US tariffs and trade wars, points to growing oversupply and increasing downside risk to prices, according to Bloomberg Intelligence analysts Salih Yilmaz and Will Hares. Depressed crude markets put Middle East finances at risk as many countries require elevated prices to back spending and investment on their economic diversification strategies.
Saudi Arabia, for instance, needs oil above $90 a barrel, according to the International Monetary Fund. Iraq also needs prices above $90 a barrel, while Kazakhstan would need it to be more than $115 a barrel, the IMF estimates. Lower oil prices have already been squeezing Saudi finances in recent years, resulting in budget deficits and adjustments to spending on projects related to Crown Prince Mohammed bin Salman’s diversification agenda.
A renewed decline in oil revenues across the GCC risks slowing regional economic transformation plans and spending on mega projects, especially in the kingdom, according to Amwal’s Arbid. He doesn’t expect any direct impact from the 10% tariff imposed by the US on GCC countries, noting the level is “low” and that political alignment with the US is “very strong.” Trump is due to meet with Israeli Prime Minister Benjamin Netanyahu on Monday in Washington to discuss the possibility of a better tariff deal for the country.
The US president is also expected to visit Saudi Arabia in the near future, in what would be his first international trip since returning to the White House in January. (Updates with Israel stock index in second paragraph) More stories like this are available on bloomberg.com ©2025 Bloomberg L.
P..
