Middle East conflict ignites oil market, Gulf stock markets plunge, Dubai drops 12% in four days

(1) As the war between Israel and Iran continues, and concerns over supply disruptions loom over the Strait of Hormuz, most Gulf stock markets opened lower on Monday, with the UAE market leading the decline. International oil prices soared by more than 10% as a result. The US President's tough statement of "no intention to negotiate," along with news of Iran appointing a hardliner as its new Supreme Leader, further extinguished hopes for peace. (2) Dubai's main stock index plunged 3.4%, marking its fourth consecutive day of decline. Since trading resumed on Wednesday, the cumulative drop has exceeded 12%, turning negative for the year. Blue-chip Emaar Properties fell 4.7%, the largest lender Emirates NBD dropped 4.3%, and budget airline Air Arabia also slid 5%. (3) The Abu Dhabi index fell 1.7%, recording a six-day losing streak, with Abu Dhabi Commercial Bank leading the decline, down 4.9%. Previously, both exchanges announced a temporary lower price limit for securities set at -5%. The Qatar index dropped 2.5%, with QNB, the largest bank in the Gulf by assets, down 2.7%. (4) The credit market was also on edge. Data showed Bahrain's five-year credit default swaps surged 23 basis points to 281, hitting a more than three-year high. Egypt's CDS jumped 12 basis points, while CDS for Saudi Arabia, Qatar, Abu Dhabi, and Dubai all rose by 4 basis points. (5) Saudi Arabia's benchmark index fell 1%, ending a five-day winning streak. Al Rajhi Bank and Saudi Arabian Mining Company dropped 2% and 3.5%, respectively, while budget airline flynas fell 3.6%. Saudi Aramco edged up 0.3%, with the market awaiting its annual financial report to be released on Tuesday. (6) Sky Links Capital Group believes that rising oil prices could have boosted the income of oil-producing countries, but disruptions in the Strait of Hormuz are suppressing the benefits by hindering transportation and limiting output. However, thanks to pipeline infrastructure that can maintain partial crude oil exports, the UAE and Saudi Arabia are in a relatively better position. Oman was one of the few markets to rise on Monday, with its stock index gaining 3.2%.