Most Gulf stock markets declined at the beginning of trading on Thursday, as pressures mounted on the fragile regional ceasefire, raising investor concerns about the prolonged geopolitical and inflationary risks.
Concerns about the durability of the ceasefire emerged on Wednesday after Israel continued its strikes on Lebanon, while Iran deemed it "illogical" to proceed with peace talks under the current circumstances.
Details of the Event
Both Israel and the United States confirmed that the two-week ceasefire does not include Lebanon, with Israeli Prime Minister Benjamin Netanyahu indicating that strikes would continue. Iran has also targeted oil infrastructure in neighboring Gulf countries, including a Saudi pipeline used as an alternative route to the disrupted Strait of Hormuz, according to sources in the oil sector. Kuwait, Bahrain, and the UAE reported missile and drone attacks.
The main index of the Saudi market fell by 0.2%, impacted by a 0.5% drop in shares of the country's largest bank, the National Commercial Bank. In contrast, shares of Saudi Aramco increased by 0.2%.
Context and Background
Brent crude futures rose by $2.18, or 2.3%, reaching $96.93 per barrel by 06:45 GMT. The main index of the Dubai Financial Market fell by 1.3%, after having recorded gains exceeding 6% in the previous session, influenced by a 2.3% drop in shares of Emaar Properties.
In Abu Dhabi, the index declined by 0.4%, with shares of Aldar Properties dropping by 1.6%. A spokesperson for the UAE Ministry of Foreign Affairs stated on the platform "X" that the UAE would seek clarifications regarding the terms of the two-week ceasefire between the United States and Iran to ensure Tehran's full compliance with halting regional attacks.
Consequences and Impact
The Qatari index also fell by 0.5%, with shares of Industries Qatar decreasing by 1.6%. ExxonMobil announced a 6% decline in its oil production during the first quarter of the year due to disruptions linked to the war in the Middle East, according to a statement submitted to the U.S. Securities and Exchange Commission.
The war, which began with the U.S.-Israeli attack on Iran on February 28, has caused oil prices to rise above $100 per barrel in recent weeks, contributing to increased natural gas prices in some markets. Despite a sharp drop in crude oil prices on Wednesday following the ceasefire announcement, rising commodity prices are expected to support oil companies' profits overall.
Impact on the Arab Region
ExxonMobil expects earnings per share to be higher than in the last quarter of 2025. Additionally, disruptions in facilities in Qatar and the UAE will lead to a global oil equivalent production drop of about 6% in the first quarter compared to the last quarter of 2025. The attacks targeted two liquefied natural gas units in Qatar, in which ExxonMobil holds a stake, and the company indicated that repairing the damage will take a long time.
Conversely, ExxonMobil plans to increase its production in the Permian Basin, a rich oil shale basin in Texas and New Mexico, to 1.8 million barrels of oil equivalent per day in 2026 compared to 1.6 million barrels per day in 2025.
Oil prices remain about 40% higher than pre-conflict levels, raising concerns about the potential impact of these increases on inflation soon in economic data.