Most Gulf markets in black despite regional conflict
June 23 (Reuters) - Most stock markets in the Gulf ended higher on Monday amid rising oil prices, as investors anxiously waited to see if Iran would retaliate against U.S. attacks on its nuclear sites.
Oil prices touched a five-month high before paring gains on Monday as oil and gas transit continued on tankers from the Middle East after U.S. airstrikes against Iran at the weekend.
Market participants expect further price gains amid mounting fears that an Iranian retaliation may include closing the Strait of Hormuz, through which roughly a fifth of global crude supply flows.
Saudi Arabia's benchmark index (.TASI), opens new tab advanced 1.3%, buoyed by a 1.6% rise in Al Rajhi Bank (1120.SE), opens new tab and 1.5% increase in the country's biggest lender Saudi National Bank (1180.SE), opens new tab.
Investors downplayed the potential for further escalation in the regional military conflict. This sentiment follows the possibility of peace talks, though the probability of such discussions remains low. This upward movement could be temporary, as volatility and uncertainty persist, said Hani Abuagla Senior Market Analyst at XTB MENA.
"The situation could worsen if Iran closes the Strait of Hormuz, which would disrupt oil supplies and potentially lead to further military escalation."
Dubai's main share index (.DFMGI), opens new tab climbed 1.1%, led by a 2.8% rise in blue-chip developer Emaar Properties (EMAR.DU), opens new tab and a 1.8% increase in sharia-compliant lender Dubai Islamic Bank (DISB.DU), opens new tab.
According to Abuagla, improved investor risk appetite returned to support the Dubai market. The focus has shifted back to the healthy economic fundamentals, which could foster further recovery if this trend continues.
In Abu Dhabi, the index (.FTFADGI), opens new tab closed 0.5% higher.
The Qatari index (.QSI), opens new tab rose 0.5%, with petrochemical maker Industries Qatar (IQCD.QA), opens new tab gaining 0.8%.
Gulf states, home to multiple U.S. military bases, were on high alert on Sunday, with their leaders calling on all parties to exercise maximum restraint following U.S. strikes on Iran that raised the possibility of a wider conflict.
Nuclear authorities in Saudi Arabia and the UAE said they had not detected signs of nuclear contamination following the strikes in Iran.
Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab increased 1.2%, with investment bank EFG Holding Co (HRHO.CA), opens new tab jumping 7.2%.
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Reuters
28 minutes ago
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Escalating Hormuz tensions drive up Middle East war risk insurance costs, sources say
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The Guardian
an hour ago
- The Guardian
Airlines pay the price as no-go airspace increases due to global conflicts
With barely 48 hours elapsed since the US launched strikes against Iran, the swift resumption of near-normal service circumnavigating the war zone underlines that few crises, short of the global pandemic, have stopped airlines and their passengers flying for long. British Airways had been planning to restart flights to the Middle East cities of Doha and Dubai again, after cancelling departures from Heathrow at the weekend. However, on Monday evening Qatar closed its airspace again as Iran launched a missile attack on US bases in the country. Nevertheless, the hiatus so far has been significant, given the airports involved are critical Gulf hubs in international aviation on routes where options have become limited and the geopolitical squeeze is getting tighter. The first job of the industry is to steer clear of unnecessary risk, with uncertain threats after the escalation of conflict in the Middle East, and the reach of modern drone and missile attacks. Aviation has long stressed that safety is paramount, but has been rocked by this month's Air India disaster, the deadliest crash on a modern, scheduled airliner in many years. Global air traffic, certainly that looking to connect Europe and Asia, has already been forced into a tighter funnel: passenger planes have not flown over Ukraine since the Russian invasion three years ago, and most western airlines are also banned from Russian airspace. That has already made, for example, London-Japan flights borderline unviable for airlines competing with Chinese carriers who can continue on a direct route over Russia, and many have trimmed back accordingly. The closure of Ukraine's skies has compounded congestion within European aviation, with many operators complaining bitterly of air traffic control delays as they compete for safe passage. A similar scenario could unfold on the ever-tighter corridors now available in the Middle East, says aviation analyst John Strickland of JLS consulting: 'The Gulf is a busy region, even for airlines who are not based there. The more it is restricted, the more challenging it is for airlines.' For now the route over Iraq as well as Iran remain off limits, and aviation in Israel is restricted to a few rescue flights operated by El Al to bring nationals home. The European safety agency, EASA, has advised against flying over Syria, Jordan and Lebanon since 13 June, and parts of Egyptian airspace are also regarded as a risk. In the swarm of planes plotted on tracking sites such as FlightRadar24, the growing no-go zones are clearly visible. Some airlines now route north via Georgia and over Afghanistan, while others are forced round the south-west to turn east over Saudi Arabia. The Gulf carriers continue to operate most services as normal despite the confines – Emirates' only current ongoing cancellations are the services directly to Tehran and Baghdad. Singapore Airlines and AirFrance-KLM were among those who joined BA in weekend cancellations, while Finnair – boxed in more than most already by Ukraine and Russia – has put all flights on hold to Doha until the end of the month. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The immediate moves for cancellations will have been primarily motivated by security. But in the longer term the schedules will also be dictated by dwindling profit margins from longer flights, and potential for more disruptive delays. 'It is adding significant time to flights, which not only makes them late but more expensive to operate because they are burning more fuel,' Strickland says. 'And if crews are on duty longer, they risk having to cancel flights due to restrictions on working hours and potential nonavailability of crew – as well as for reasons of safety and security.' Share prices in airlines have dipped to various degrees since Israel launched the first attack on 12 June. Airlines will also keenly be watching the rising oil price that has ensued – and the premium paid for jet fuel, which has risen even more sharply than the price of crude in recent weeks. The world has been keen to fly since the Covid crisis, and willing to pay a premium. Hedging means that the oil price may not filter through into fares this summer, but with Ryanair already signalling that fares would rise regardless this year, passengers may find themselves paying ever more for the privilege.
Reuters
2 hours ago
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Breakingviews - Markets' Gulf composure fits a wider pattern
LONDON, June 23 (Reuters Breakingviews) - Investors don't seem that bothered about the United States' dramatic intervention in Israel's war with Iran. Despite President Donald Trump's decision to bomb three of the Islamic Republic's nuclear facilities over the weekend, asset prices hardly budged. History does suggest geopolitical flashpoints aren't always long-term headaches for investors – but the data doesn't conclusively prove they've made the right call. On Monday morning, the STOXX 600 declined 0.1%, meaning the European equity benchmark is only down around 2.5% since Israeli attacks on June 13. German and Saudi 10-year bond yields rose marginally. The U.S. S&P 500 was also due to drop only 0.1% on opening, according to futures prices collected by LSEG. And Brent oil contracts for August delivery rose just 0.6% to trade at $77 a barrel, admittedly above the $66 level seen earlier this month, but hardly pricing in major disruptions. This all seems highly premature. While Trump called on Sunday for peace following what could reasonably be seen as an act of war, he continues to post on social media about the possibility of Iranian regime change. Iran's parliament has already approved actions to block the Strait of Hormuz, through which 20% of the world's daily oil supply passes. As such, markets should be braced for further escalation, not less. One explanation might be that investors know that geopolitical storms are often just squalls. A JPMorgan study, opens new tab of 36 different political and martial flashpoints between Germany's invasion of France in 1940 and Russia's invasion of Ukraine in 2022 found that the S&P 500 returned 0.3% in the three months afterwards, against 1.3% over the same period in calmer times. But over six months the returns were the same. Oil-related shocks are, admittedly, different. The 1990 Gulf War saw the S&P 500 drop 20% in the two months after Iraq's invasion of Kuwait in August, although it recovered these losses by February 1991. But after the five-month Arab oil embargo in 1973, the S&P was still lower five years later. Investors' sangfroid may reflect confidence that Trump's attacks are a run-of-the-mill geopolitical squall. More likely, they see the latest crisis as a potential oil shock, but one that the U.S. can easily contain. There's some logic in that: even if Iran tries to block Hormuz, a move its Supreme National Security Council still needs to approve, the U.S. Fifth Fleet in Bahrain might stop it. Meanwhile, restricting oil exports would hurt Tehran too. Yet the geopolitical received wisdom could easily be wrong, especially if a cornered Iranian regime starts to fear that Trump and Israel will push to replace it, and resorts to drastic measures. In that scenario, markets' relative calm might still quickly turn to panic. Follow George Hay on Bluesky, opens new tab and LinkedIn, opens new tab.
