Gulf markets end higher, shielded from major turmoil after the U.S. strike on Iran

Markets across the Middle East ended mostly higher on Sunday after the United States entered the war between Israel and Iran and struck three key Iranian nuclear sites, Fordo, Natanz and Isfahan.
Stocks in Tel Aviv reached an all-time high on Sunday on bets that Washington's entrance into the conflict with Tehran would help it to come to an end, despite the Iranian Foreign Minister's insistence that the country could not return to diplomacy "while under attack."
The broader TA-125 index was trading 1.77% higher on Sunday, while the TA-35, Tel Aviv's blue-chip index, was up 1.5%. Equities climbed in Israel last week after the country hit targets in Iran.
In the Gulf, Saudi Arabia's Tadawul opened Sunday trading nearly half a percent higher before erasing earlier gains and closing down 0.3%. Qatar gained 0.2% and Bahrain's index added 0.3%. Bahrain, home to the U.S. Central Command, issued a "work from home mandate" on Sunday, urging citizens to "only use main roads when necessary to maintain public safety."
Egypt's benchmark EGX30 was the major gainer in the region, closing 2.7% higher on Sunday.
"The Gulf has distanced itself and has been calling for appeasement, supporting a peaceful resolution, and has gone as far as condemning Israeli aggression," Fadi Arbid, founding partner and CIO of Amwal Capital Partners, told CNBC. He explained that such rhetoric "has helped the Gulf isolate itself from conflict" and any significant short-term market impact, adding that the net mid-term is positive.
"The market might be priced in on removing a big overhang, which is the Iranian threat," Arbid said, which "at least the international investor would look at positively" once the issue of Iran is removed.
Saudi Arabia, the UAE and Qatar have all released statements in the last 24 hours, the UAE urged an immediate halt to escalation to "avoid serious repercussions" in the region, while Saudi Arabia expressed concern and Qatar said it "deplored deterioration" in the conflict between Israel and Iran.
Investors will be watching for swings in the oil market when it opens later this evening, and whether Iran intends to block the Strait of Hormuz, a crucial waterway through which a quarter of the world's oil supply passes.
Tanker Trackers, a website that tracks global oil shipments, said that as of 3:40 p.m. UAE time on Sunday, "tanker traffic is still moving in both directions within the Strait of Hormuz," citing AIS data.
"Oil prices are likely to open higher, further increasing the geopolitical risk premium," Giovanni Staunovo, a commodity analyst at UBS told CNBC on Sunday, adding that oil will maintain a "risk premium for now," and prices will remain volatile in the near term as it is "unclear how the conflict might evolve."
Prices fell 2% on Friday, before U.S. President Donald Trump moved to enter the war between Israel and Iran. Brent futures have jumped 11% since Israel's attack on Iran less than two weeks ago, and both Brent and U.S. crude oil have remained volatile since. Prices are expected to rise on Monday following Washington's strike on Iran's nuclear facilities.
"Oil markets are likely to take the U.S. attacks as a substantial escalation of the war and price in elevated security of supply risks." Edward Bell, acting chief economist at Emirates NDB, told CNBC. He added that markets remain bound by headlines, not fundamentals and said to expect "big swings" in the coming days.
"While there remains no interruption to flows of oil coming out of the Gulf and oil infrastructure has not come under direct attack, markets will still likely price in an elevated geopolitical premium," Bell said.

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Their official, publicly stated assessment of Iran's nuclear weapons ambitions is that Supreme Leader Ayatollah Ali Khamenei suspended the country's nuclear weapons program in 2003, the year that the United States invaded Iraq and toppled Saddam Hussein in order to seize his supposed weapons of mass destruction. Those turned out not to exist. But Iran's leaders reasonably feared the United States might next turn its sights on their country and its very real weapons program. Tulsi Gabbard, the Director of National Intelligence and (on paper at least) Trump's senior intelligence adviser, reiterated the consensus view in congressional testimony this March. But she also noted that Iran had built up its largest-ever stockpile of enriched uranium, the core ingredient of a weapon, in a manner that was 'unprecedented for a state without nuclear weapons.' Her brief remark escaped much scrutiny, but turns out to have been telling. In recent briefings with Trump, CIA Director John Ratcliffe has laid out what the intelligence agencies know, particularly about Iran's uranium stockpiles, and said it was clear Iran was trying to build a nuclear weapon, according to officials familiar with his presentation who spoke on the condition of anonymity to discuss a sensitive matter. On its face, that appears to contradict the long-standing intelligence community position. But Ratcliffe's analysis is actually a more nuanced reading of the available information. In a separate briefing for lawmakers last week, Ratcliffe used a football analogy to describe Iran's ambitions. If a team had gone 99 yards down the field, their intention was obviously to score a touchdown, not stop at the one-yard line, he said. International experts agree that Iran has enriched uranium to a point that is close to weapons grade, a fact that Vice President J.D. Vance has emphasized in his own public remarks. Senior administration officials take little comfort in Khameini's decades-old halt to the nuclear weapons program. Trump believes Iran is actively pursuing everything it would need to build a weapon, and in relatively short order, if the supreme leader gave the go-ahead. That's the real threat, and the reason Trump gave the order to strike now, officials told me. It also helps that Israel has helped pave the way. Trump's thinking is in line with Prime Minister Benjamin Netanyahu, who has said that Iran may have been months or mere weeks away from building a weapon, and has generally taken the view that the country's leaders are stockpiling uranium precisely for that purpose. In the week leading up to the U.S. strike-–which Israeli leaders appear not to have known about in advance-–the Israeli air force pummeled nuclear facilities, killed nuclear scientists and experts, and degraded Iranian air defenses. The Israeli attacks, like the American ones, appear to have been largely driven by a sense of opportunity, after Israel previously weakened the regime and neutralized its longtime proxy forces in the region. There is no reason to think that the Trump administration, or Israel, suddenly had some new window into Khamieni's brain. But the president took an intuitive view of the intelligence the United States has long possessed, and a fateful set of actions based on it. It's too pat to say that Trump has ignored his intelligence advisers, although he certainly created that impression. 'Well then my intelligence community is wrong,' he said earlier in the week when a reporter noted that the agencies had found no evidence that Iran was trying to build a weapon. Trump had previously said Gabbard was also wrong when she testified earlier this year. Officials have told me that they're not just concerned about Iran's ability to build a warhead that could be placed atop a ballistic missile—a complex process that would require Iran to build a device that could survive reentry into earth's atmosphere and land precisely on its target. The regime could construct a simpler device and hand it over to a third party. In an interview last month with a state-linked news outlet, Fereydoon Abbasi-Davani, a leading Iranian nuclear scientist and the former head of the country's Atomic Energy Organization, warned that Iran could use nuclear weapons against the United States, Great Britain, and Israel without deploying them on missiles or an aircraft. 'What if they are attacked from within?' he asked, an unsubtle suggestion that Iran could give a nuclear weapon to one of its proxies. Israel was apparently listening and thought that Abbassi-Davani might possess the know-how to make such a device. He was killed earlier this month in an Israeli air strike. Democratic lawmakers and Trump's critics are sure to press for more information on when and how the president came to his decision. Senator Chris Murphy of Connecticut told my colleague Issac Stanely-Becker on Saturday that he was briefed last week on the intelligence. It ' was clear to me that Iran did not pose an imminent threat, that they are not on the verge of being able to obtain a nuclear weapon that could pose a real threat to neighbors and that negotiations were ongoing and certainly not at their endpoints,' Murphy said. On Saturday morning, Defense Secretary Pete Hegseth briefed reporters about the U.S. operation and was asked if new information had persuaded Trump to act. Hegseth declined to share many details about Trump's decision-making, but he allowed that, "the president has made it very clear [that] he's looked at all of this, all of the intelligence, all the information, and come to the conclusion that the Iranian nuclear program is a threat, and was willing to take this precision operation to neutralize that threat.' Ultimately, Trump's decision to bomb Iran had little to do with any sudden change in intelligence assessments. The choice to use military force was a judgment call, and now, it's his to own.