Saudi Shares Slide After Pipeline Strike; Gulf Markets Mixed
Saudi Arabia's stock index fell 1.3% after a precautionary shutdown of the East-West pipeline following aerial strikes, with Gulf markets mixed.
Saudi Arabian shares fell on Sunday, leading a broadly weaker session across Gulf markets, after a precautionary shutdown of the kingdom's East-West pipeline following aerial strikes tested investor nerves across the region.
The benchmark index in Riyadh dropped 1.3%, its steepest intraday decline since early April. Al Rajhi Bank shed 1.2%, Saudi Arabian Mining Company slid 3.2%, and oil giant Saudi Aramco lost 1.6%. Saudi Aramco Base Oil Co - Luberef plunged 10%, making it the session's worst performer.
The sell-off followed Thursday's aerial strikes on installations across the Riyadh and Medina regions, which caused several injuries. Both Riyadh and Baghdad traced the attack to Iraqi territory, where Iran-backed militias operate, prompting the Iraqi government to dismiss a senior military commander on Saturday.
Saudi Arabia held back from immediate military retaliation after an appeal from Iraq's prime minister, while asserting its right to defend its sovereignty and critical infrastructure. U.S. President Donald Trump on Saturday directly blamed Iran for the strikes on the conduit, which serves as the kingdom's primary export alternative to bypass the Strait of Hormuz.
Traders and buyers warned that Saudi Arabia faces an imminent shortage of export crude unless it restarts the key Red Sea pipeline within days — a disruption that could knock out up to 4% of world oil supply. The potential shortfall looms over an already strained global market, where surging energy costs have exacerbated worldwide inflation and driven U.S. bond yields to their highest marks since 2008.
Persistent maritime disruptions and the continued closure of the Strait of Hormuz kept investors on edge. Milad Azar, market analyst at XTB MENA, said sentiment was likely to remain restrained without a swift breakthrough at Monday's planned diplomatic talks in Oman between Iran and Gulf states.
Gulf foreign ministers plan to meet their Iranian counterpart on Monday in an Oman-backed push to secure an interim deal on managing traffic through the Strait of Hormuz.
Elsewhere in the region, Qatar's benchmark index bucked the trend, rising 0.3% on gains in the Gulf's biggest lender, Qatar National Bank. Outside the Gulf, Egypt's blue-chip index lost 1.1%. Bahrain and Oman closed flat, while Kuwait slipped 0.2%.