Caution crept across Middle Eastern trading floors on Tuesday, as investors weighed the optics of diplomacy in Europe against military manoeuvres in one of the world’s most sensitive waterways.
In Saudi Arabia, the main index at the Saudi Stock Exchange slid 0.9%, reflecting a mood that was more guarded than panicked. Banking heavyweight Al Rajhi Bank eased 1.1%, while mining giant Saudi Arabian Mining Company tumbled 3.3%. Energy bellwether Saudi Aramco also edged lower, shedding 0.4%.
Oil prices — the lifeblood of Gulf markets — drifted down as traders awaited signals from renewed U.S.–Iran nuclear discussions. The talks, taking place in Geneva, aim to cool a long-simmering standoff just as OPEC+ supply increases loom on the horizon.
Adding to the tension, Iran launched naval exercises in the Strait of Hormuz, a narrow but critical artery through which a significant share of the world’s oil exports flows. Gulf Arab states have consistently pressed for a diplomatic off-ramp, wary of any disruption to shipping lanes that underpin regional economies.
U.S. President Donald Trump signalled he would play an “indirect” role in the Geneva negotiations, expressing optimism that Tehran is open to a deal. Days earlier, he had remarked that regime change in Iran “would be the best thing that could happen,” underscoring the unpredictability surrounding the talks. Reports have also indicated that the U.S. military is preparing contingency plans should tensions escalate further.
Across the UAE, sentiment mirrored the broader regional unease. Dubai’s benchmark index slipped 0.4%, dragged down by a 2% drop in Dubai Islamic Bank. Abu Dhabi’s index lost 0.3%.
In Qatar, the main gauge retreated 1%, pressured by a 2.6% decline in Qatar National Bank, the Gulf’s largest lender by assets.
For now, markets appear to be holding their breath — suspended between diplomacy and deterrence, watching both the negotiating table in Europe and the warships in the Gulf.
