Oil Rally and Regional Tensions Set Stage for Middle East Markets
Oil prices rally on tanker attacks and drone strikes, while UAE urges reopening of Hormuz after ADNOC vessel incident.
Middle East stock markets are bracing for a volatile session on Sunday, with oil prices rallying more than a dollar on fresh geopolitical tensions and US economic data that has dampened expectations of a near-term Federal Reserve rate hike.
Crude benchmarks climbed after a series of attacks on tankers and the absence of any meaningful progress toward peace in the region. The gains were further supported by a weaker dollar, which also helped gold prices firm as inflation data reinforced bets that the Fed will hold rates steady.
In the Gulf, attention is focused on the Strait of Hormuz after the UAE said Iran attacked an ADNOC vessel in the waterway. Abu Dhabi has urged the reopening of the strategic channel, which remains a critical artery for global oil shipments. Iran, meanwhile, remained defiant over the strait, even as former US President Donald Trump told Americans to accept higher gasoline prices.
Regional equity performance was mixed in the previous session. Dubai slipped, weighed down by weak earnings from Air Arabia and Alec, while Abu Dhabi edged up. Investors will now watch whether the latest oil price strength can lift sentiment across the Gulf bourses.
In Yemen, the port of Mocha has halted operations following Houthi attacks, according to the port director. The Houthis also claimed they targeted Saudi Aramco facilities in Najran with a drone. Qatar, for its part, denied holding Iranian pilots, a statement that adds to the complex web of regional tensions.
With oil prices firm and geopolitical risks elevated, traders will be closely monitoring how Gulf markets absorb these developments when trading resumes.