Global and Gulf investors are closely watching Gulf market reactions as the conflict with Iran continues. The war has triggered sharp fluctuations across the region, while oil prices and the US dollar have emerged as top gainers. Analysts noted that Gulf markets are reacting differently, with some showing resilience and others experiencing significant drops.
In the Gulf, Saudi Arabia’s stock market remained relatively stable, benefiting from rising oil prices. The Tadawul index recorded modest gains of 0.6% for the week, outperforming other regional exchanges. In contrast, the UAE markets suffered substantial losses. The Dubai Financial Market index fell 9%, and the FADX15 index dropped by 6.2%, marking the weakest performance in the Gulf since the outbreak of the war.
Kuwait, Qatar, and Bahrain also experienced turbulence, though their markets did not fall as sharply as Dubai. Investors are closely monitoring energy-related stocks and government bond yields. Analysts explained that Gulf market reactions depend on each country’s exposure to oil exports, foreign investment, and economic stability.
Meanwhile, global investors are pricing in broader economic risks. In the United States, interest rate contracts indicate a 40-basis-point rate cut in 2026, down from 59 basis points before the war. Equity markets also reacted, with the S&P 500 falling 2%, Nasdaq down 1.2%, and Dow Jones declining 3%. European markets showed higher sensitivity to the conflict due to their reliance on Gulf energy, with the STOXX 600 index falling 5.5%. Natural gas futures in Europe recorded their largest weekly gain in four years.
Oil has clearly been the largest winner in the Gulf region. Brent crude rose 28%, while WTI crude jumped 36% during the first week of the conflict. Disruptions in shipping through the Strait of Hormuz have strengthened supply concerns, pushing prices higher. Similarly, the US dollar benefited from safe-haven demand, achieving its biggest weekly gain since November 2024.
However, gold did not follow the usual safe-haven pattern. The stronger dollar caused gold prices to fall around 2%, despite geopolitical tensions. Analysts believe investors are prioritizing energy and currency markets over precious metals during this period.
Regional authorities are closely monitoring financial stability. Investors are advised to remain cautious as geopolitical developments continue to drive volatility. Economists emphasize that Gulf market reactions will remain sensitive to both regional conflict and global economic trends in the coming weeks.
