Middle Eastern stocks lower on geopolitics
DUBAI: Stock markets in the Middle East ended lower on Thursday with uncertainty looming after the US decided to relocate personnel from the region ahead of nuclear talks with Iran.
US President Donald Trump said on Wednesday US personnel were being moved out of the Middle East because 'it could be a dangerous place', adding that the United States would not allow Iran to have a nuclear weapon.
Saudi Arabia's benchmark index declined 1.5%, dragged down by a 1.2% fall in Al Rajhi Bank and a 3.3% decrease in Saudi Arabian Mining Company.
The Saudi bourse retreated, erasing all recent recovery gains and pushing the index back towards early June levels. All sectors posted negative performances, indicating a pervasive risk-off sentiment during today's session, said Milad Azar, market analyst at XTB MENA.
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Gulf countries fear Israel-Iran spillover
Gulf countries on Friday unanimously condemned Israel's strikes on Iran, fearing an escalation that could threaten economic interests and security. "Gulf states are very much caught between a rock and a hard place," Sanam Vakil, director of the Chatham House think-tank's Middle East and North Africa Programme told AFP. While "they are quietly applauding the further weakening of Iran they face real risks and have to play their cards carefully", she said. Their close ties to Israel's protector Washington, which maintains military bases in the region, and their proximity to Iran — and its missiles — pose risks. Vakil said that "Saudi diplomats are distancing themselves from Israel and condemning the strikes as a means to stay out of this conflict". The unfolding situation is playing out against a recent diplomatic rapprochement Riyadh has been building with Tehran ever since China in 2023 brokered an agreement aiming to restore ties. "This is a notable difference with the situation that prevailed in the region 10 years ago, when Saudi Arabia was sort of inciting the United States to strike Iran, calling it the 'head of the snake'," said Karim Bitar, a lecturer in Middle Eastern studies at Paris's Sciences Po university. Indeed, as Tehran reeled from Israel's attacks and planned retaliation, Saudi Arabian Foreign Minister Faisal bin Farhan called his Iranian counterpart and "stressed the importance of dialogue to address disputes". "Gulf countries realise that this Israeli attack will jeopardise their economic interests as well as the entire stability" of the region, Bitar said. That is a major preoccupation of Saudi Crown Prince Mohammed bin Salman, who has been focusing on economic growth, giga-projects at home and diversification away from oil. During Donald Trump's first US presidency, Saudi Arabia and the United Arab Emirates had pushed for a stronger stance against Iran. Gulf countries supported Trump's decision to pull the United States out of the 2015 Iran nuclear deal. But Gulf sentiment began to change after the United States failed to provide significant backing following attacks blamed on Tehran, analysts said. A 2019 attack — claimed by Yemen's Huthis but blamed by Riyadh and Washington on Tehran — hit Saudi Arabia's Abqaiq processing plant and Khurais oil field, temporarily halving the kingdom's crude output. Tehran denied involvement. The UAE too has been targeted by attacks from the Huthis that hit Abu Dhabi in 2022. Seeking to avert attacks by Iran and its proxies, especially as they host US bases that could become targets in the wake of a broader conflict, Gulf monarchies have pursued a detente.
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Dollar gains against euro and yen
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5 hours ago
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Oil up 6pc after Israel's strikes on Iran
HOUSTON: Oil prices fell off multi-month highs hit earlier on Friday as Israeli air strikes avoided Iranian oil sites, but prices still up about 6% as investors worried that the tensions could disrupt Middle East oil supplies. Brent crude futures were up $4.11, or 5.9%, to $73.47 a barrel by 11:12 a.m. EDT (1712 GMT), after earlier soaring over 13% to an intraday high of $78.50, the strongest level since January 27. US West Texas Intermediate crude was up $4.38, or 6.4%, at $72.42, after earlier jumping over 14% to its highest since January 21 at $77.62. Friday's gains were the largest intraday moves for both contracts since 2022 when Russia's invasion of Ukraine caused a spike in energy prices. Israel said it had targeted Iran's nuclear facilities, ballistic missile factories and military commanders on Friday at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon. Iran has promised a harsh response. US President Donald Trump urged Iran to make a deal over its nuclear programme, to put an end to the 'next already planned attacks.' The National Iranian Oil Refining and Distribution Company said oil refining and storage facilities had not been damaged and continued to operate. 'Almost every time you get that big fear response, but then it's almost always not as bad as first thought,' said Phil Flynn, senior analyst at Price Futures Group. 'The Israelis haven't targeted oil refineries and oil pipelines. They haven't targeted oil ships.' One primary concern, according to analysts, was whether the latest developments would affect the Strait of Hormuz, said Nikos Tzabouras, senior market analyst at 'Sustained upside would require actual disruptions to physical flows - such as damage to Iran's oil infrastructure or a blockade of the Strait of Hormuz, a key global chokepoint,' Tzabouras said in a note on Friday morning.
