Middle East Markets Brace for Iran Sanctions Fallout, Hormuz Risks
Gulf stocks inch higher on Saudi strength, but US-Iran tensions, Hormuz shipping risks, and a record-low rial weigh on sentiment.
Middle East stock markets opened Tuesday with modest gains, led by Saudi Arabia's continued winning streak, even as a fresh wave of geopolitical and economic pressures clouded the regional outlook.
Oil prices steadied after slipping earlier, with investors weighing the impact of the latest US sanctions on Iran. Tehran has vowed retaliation, and Washington has warned countries doing business with Iran of potential penalties, though it has held off on immediate enforcement.
A key flashpoint is the Strait of Hormuz. Commodity vessel transits through the strait have fallen to a three-month low, and Iran has threatened to fine or confiscate 45 tankers in an escalation of its pressure campaign. China and Jordan have both called for restoring passage through the strait and maintaining a US-Iran ceasefire.
Iran's currency dropped to a record low, according to tracking websites, adding to domestic economic strain. India's exports to Iran are also expected to decline further following a halt in Dubai and the tightening US sanctions.
In the Gulf, Saudi Aramco signed agreements worth over $3.7 billion with French companies, while TotalEnergies announced plans to invest in expanding the Fujairah export pipeline in Abu Dhabi. Yemen's Houthis claimed an attack on a ship off Saudi Arabia's Yanbu.
Elsewhere, Israeli fire killed two young children in Gaza, and Prime Minister Netanyahu said Iran tried to kill one of his sons. Libya signed a production-sharing agreement with Chevron, and Iraq's oil output exceeded 3 million barrels per day.
In a diplomatic shift, the US removed Syria from its terrorism sponsor list, lifting a major obstacle to investment. China said the Middle East is at a critical point and called for dialogue to cool tensions.