Gulf Stocks Are On the Ropes as Iran Tension Adds to Trade Woes

Stocks slumped across the Gulf after Saudi Arabia said two oil tankers were damaged in a “sabotage attack” on Sunday, with regional geopolitical tension adding to an already bad day throughout markets.

Gauges in Riyadh, Dubai, Abu Dhabi and Doha were among Monday’s biggest losers globally. News of the incident led to increased trading volatility as the U.S. increases pressure on Iran, with investors also trying to price in a potential full-blown trade war between the U.S. and China.

Saudi Arabia’s Tadawul All Share Index fell as much as 2.8%, the most for a session since the crisis triggered by the killing of journalist Jamal Khashoggi in October. Not even an announcement by index compiler MSCI Inc. on which stocks it will upgrade to its main emerging-market index, to be released after U.S. markets close, was enough to pump trading and help the index recover.

The indexes in Dubai and Abu Dhabi fell 4% and 3.3%, respectively on Monday, posting their steepest drops since January 2016, when Brent crude plunged below $30 a barrel. The main reference in Qatar, which shares a giant offshore gas field with Iran and has been under a Saudi-led embargo since 2017, fell for a seventh straight session to the lowest level since September.