Oil Supply Fears and Fed Vote in Focus as Middle East Markets Open

Middle East stock markets opened the week against a backdrop of firm crude prices, renewed concern over shipping through the Strait of Hormuz and a heavy slate of regional energy diplomacy.

Oil prices slipped but were still on course for a weekly gain of about 8%, supported by tight supply, while US diesel touched a record. Gold advanced on dip-buying even as expectations of a Federal Reserve rate hike firmed after US inflation data. Wall Street had jumped and crude eased ahead of the Fed's vote next week.

Shipping in the Strait of Hormuz drew fresh attention after a vessel was struck by a projectile while transiting the waterway, according to the UK Maritime Trade Operations. The incident added to fears over threats to oil supplies, and shares in the United Arab Emirates gained as the regional conflict fuelled supply concerns.

Saudi Arabia shut down an oil pipeline as Houthi forces tightened their grip on Red Sea shipping.

Diplomatic positions on the strait remained firm. Bahrain ruled out an Iran meeting on Hormuz until diplomatic relations are restored, while Iran and Oman stopped short of any immediate reopening of the waterway, with an understanding between them not providing for such a step.

On the energy front, Germany and the UAE deepened cooperation through agreements covering renewables and gas. Masdar and Luxcara are exploring more than €5 billion in joint battery and wind power investments. QatarEnergy, meanwhile, is seeking US liquefied natural gas deals extending through to 2031.

Iran and the UAE also backed a joint BRICS statement urging restraint in the war.