Middle East markets dip as investors monitor Iran developments

Middle East stock markets closed lower on Monday as rising tensions between the United States and Iran unsettled investors, amid concerns that a fragile ceasefire could collapse and disruptions in the Strait of Hormuz would persist.

Regional sentiment weakened after reports that Tehran rejected further negotiations with Washington, while the seizure of an Iranian cargo vessel by the U.S. added to uncertainty ahead of the ceasefire’s expected expiry.

Dubai’s main index fell 2.1%, ending a four-session rally, led by declines in property and transport stocks. Emaar Properties dropped 2.3%, while Salik Company fell 2.9%. Air Arabia closed 3% lower.

In Abu Dhabi, the benchmark index declined 0.8%, with Aldar Properties down 2.7%.

Saudi Arabia’s index lost 0.9%, weighed by a 1.2% fall in Al Rajhi Bank, while Saudi Aramco ended flat after early gains.

Elsewhere, Qatar’s index slipped 0.4%, with Qatar Islamic Bank declining 1.8%. Egypt’s benchmark index fell 1.1%, led by losses in Commercial International Bank.

Markets in Bahrain, Oman and Kuwait also recorded modest declines.

The ongoing conflict has disrupted energy markets, with traffic through the Strait of Hormuz largely suspended. Brent crude rose 4.8% to $94.75 per barrel as investors assessed supply risks.

Analysts said higher oil prices could provide some support to Gulf economies despite market volatility.

The conflict, now in its eighth week, has intensified concerns over regional stability. The United States has warned of further escalation, while Iran has threatened retaliation against regional infrastructure if tensions increase.

Reports also indicated that the United Arab Emirates has begun discussions with the U.S. on potential financial support mechanisms should the situation deteriorate further, although this could not be independently verified.

Investors are expected to remain cautious in the near term, with market direction closely tied to developments in the geopolitical situation and energy markets.