Gulf Stock Markets Slide as Oil Prices Struggle

Weak oil prices pressured Gulf stock markets at the start of the week, leaving most regional indexes in negative territory. The energy sector remains the main driver for investor sentiment, and the keyword oil prices continues to shape the outlook for the region’s financial markets. Despite a slight recovery in global crude, traders remain cautious as oversupply and weak demand concerns weigh heavily.

Saudi Market Records Sixth Straight Loss

Saudi Arabia’s benchmark index declined 0.3% on Monday, marking its sixth consecutive loss. The drop was driven by weakness in heavyweight stocks. Saudi Aramco fell 0.8%, extending losses from the previous sessions. Al Rajhi Bank, one of the kingdom’s top lenders, slipped 0.3%.

Market analysts warned that the Saudi exchange remains highly exposed to fluctuations in oil prices. Rising production among major suppliers continues to limit price gains. Although crude briefly rose more than 1% on Monday, lingering worries about oversupply and slowing global demand keep pressure on Saudi equities.

Oil Price Outlook Stays Clouded

A recent Reuters poll underscored the uncertainty. Analysts suggested oil prices were unlikely to move significantly higher this year, as additional output from large producers could keep markets oversupplied. Monday’s limited rebound in oil was attributed to a weaker U.S. dollar and heightened tensions following Russia-Ukraine airstrikes.

Still, traders argue the rally is not enough to shift sentiment in the Gulf. “Even with a small rebound, the Saudi market remains vulnerable to oil price risks. Oversupply concerns and weaker demand continue to cloud the outlook,” said Joseph Dahrieh, Managing Principal at Tickmill.

Dubai Suffers Sharp Decline

Dubai’s stock market saw the steepest losses among Gulf peers. The main share index dropped 1.6%, dragged lower by real estate and property stocks. Blue-chip developer Emaar Properties slid 2.1%, weighing heavily on market performance.

Analysts suggested Dubai’s market may face further corrections unless new supportive developments appear. The decline reflects investor caution as property-linked firms remain sensitive to shifts in global liquidity and oil-driven confidence.

Abu Dhabi and Qatar Follow Downward Trend

Abu Dhabi’s main index also retreated, falling 0.8%. The downturn mirrored weakness across financial and energy-related stocks. Investors continue to track crude price moves closely, given the emirate’s reliance on hydrocarbons.

In Qatar, the index dropped 0.4%. Qatar Islamic Bank slipped 0.7%, pulling the broader market lower. The Qatari exchange has been under pressure as oil-linked sentiment spreads across the region. The outlook remains tied to global crude price stability.

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Regional Exceptions: Bahrain and Oman Gain

While most Gulf markets weakened, Bahrain and Oman moved in the opposite direction. The Bahrain index advanced 0.3%, supported by selective buying in banking shares. Oman’s MSX30 index surged 1.4% to 5,102, recording the strongest performance in the region. Localized factors and bargain hunting appeared to drive these gains.

Kuwait also posted a small gain, with its index up 0.2% to 9,101. These modest rises highlighted the divergence within Gulf markets, though overall sentiment remained cautious.

Egypt Posts Steady Performance

Outside the Gulf, Egypt’s stock market showed resilience. The EGX30 index closed flat at 35,156. Investors found encouragement in recent economic data. Finance Minister Ahmed Kouchouk announced that Egypt’s real gross domestic product grew 4.5% in the 2024–25 financial year, compared with 2.4% the year before.

The improvement was linked to reforms tied to IMF financing and higher output in the manufacturing sector. These gains have helped stabilize the economy, even as external risks remain.

Numbers at a Glance

Saudi Arabia (.TASI): down 0.3% to 10,671
Abu Dhabi (.FTFADGI): down 0.8% to 10,010
Dubai (.DFMGI): down 1.6% to 5,969
Qatar (.QSI): down 0.4% to 11,175
Egypt (.EGX30): flat at 35,156
Bahrain (.BAX): up 0.3% to 1,935
Oman (.MSX30): up 1.4% to 5,102
Kuwait (.BKP): up 0.2% to 9,101

These movements underline the mixed picture across the region, with oil dependency playing a decisive role in shaping investor sentiment.

Fragile Investor Confidence

Investor confidence in Gulf markets remains fragile. Although oil prices gained slightly on Monday, the narrow range signals persistent caution. Market participants remain wary of supply and demand imbalances that could drag prices lower again.

The Saudi market, in particular, reflects this uncertainty. Prolonged declines in Aramco shares and banking stocks demonstrate how closely the exchange tracks oil price shifts. For Dubai and Abu Dhabi, similar patterns emerge, with property and financial stocks vulnerable to continued pressure.

What Lies Ahead for Gulf Markets

The short-term outlook depends largely on the stability of oil prices. Any fresh signs of oversupply could trigger more declines across Gulf exchanges. At the same time, geopolitical risks, such as the escalation of Russia-Ukraine tensions, may inject volatility.

In contrast, countries like Egypt highlight how reforms and diversification can shield markets from energy-linked risks. For Gulf economies, the current downturn reinforces the importance of diversifying revenue streams beyond oil.

The week’s trading session underscored once again that Gulf markets remain tethered to oil’s performance. Until a clearer path for crude prices emerges, investors are likely to approach regional equities with caution.