Major stock markets across the Gulf opened lower on Tuesday, pressured by a sharp decline in oil prices and growing expectations that the U.S. Federal Reserve could adopt a more aggressive stance on interest rates later this year.
Investor sentiment weakened after Washington granted Iran a temporary sanctions waiver, allowing the country to continue crude exports for 60 days under an emerging agreement aimed at easing tensions in the Middle East. The move sparked a selloff in oil markets, with prices dropping more than 3% in the previous session.
Adding to the cautious mood, U.S. Vice President JD Vance indicated that diplomatic discussions with Iran had made progress and confirmed that shipping through the Strait of Hormuz remained uninterrupted.
Brent crude futures extended losses on Tuesday, falling $1.09, or 1.4%, to trade at $76.81 per barrel.
The softer oil market weighed on regional equities, particularly in economies where energy revenues play a central role.
Saudi Arabia’s benchmark index slipped 0.2%, with banking stocks among the main drags. Al Rajhi Bank edged down 0.3%, contributing to the market’s decline.
In Qatar, the main index lost 0.1%, pressured by a 0.2% fall in Qatar Islamic Bank.
Markets are also grappling with shifting expectations around U.S. monetary policy. Traders increasingly believe the Federal Reserve could raise borrowing costs more aggressively under its new leadership as policymakers seek to contain inflationary pressures.
According to market pricing, the likelihood of at least two quarter-point rate increases before year-end has risen sharply over the past week, reflecting a significant shift in investor expectations.
The prospect of higher U.S. rates often resonates strongly across Gulf markets, where most currencies remain pegged to the dollar, effectively tying regional financial conditions to moves by the Federal Reserve.
Dubai posted the region’s steepest decline, with its main index retreating 1.1%. Emirates NBD led the losses among heavyweight stocks, falling 2.7%.
Abu Dhabi’s benchmark index also moved lower, shedding 0.5% as investors adopted a more defensive stance amid the changing outlook for oil and global interest rates.
