Mideast stocks fall on US tariffs, low oil prices squeeze energy nations

Middle East stock markets tumbled Monday as they struggled with the dual hit of the United States' new tariff policy and a sharp decline in oil prices, squeezing energy-producing nations that rely on those sales to power their economies and government spending.

Benchmark Brent crude is down by nearly 15 per cent over the last five days of trading, with a barrel of oil costing just over $63. That's down nearly 30 per cent from a year ago, when a barrel cost over $90.

That cost per barrel is far lower than the estimated break-even price for Saudi Arabia and most other countries producing energy in the Middle East. That's coupled with the new tariffs, which saw the Gulf Cooperation Council states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates hit with 10 per cent tariffs. Other Mideast nations face higher tariffs, like Iraq at 39 per cent and Syria at 41 per cent.

 

With these measures and the expected retaliatory measures that could be adopted by other countries, the stability and predictability of international trade could be undermined, the accounting firm PwC said in an advisory to its Mideast clients.

Losses sweep region

The Dubai Financial Market exchange fell 5 per cent as it opened for the week. The Abu Dhabi Securities Exchange fell 4 per cent.

Markets that opened Sunday saw losses as well. Saudi Arabia's Tadawul stock exchange fell over 6 per cent in trading. The giant of the exchange, Saudi Arabia's state-owned oil company Aramco, fell over 5 per cent on its own, wiping away billions in market capitalization for the world's sixth-most-valuable company.

The drop in Aramco, whose shares also power Crown Prince Mohammed bin Salman's expansive plans to reshape the kingdom's economy, ties directly back to the overall price of oil. The OPEC+ oil cartel already has planned to boost production as well, further forcing prices down.

OPEC+ has shifted its market management strategy from a steady incremental increase in output to monthly announced targets, bringing forward higher output levels for May this year, an analysis published Monday by the state-majority-owned Emirates NBD Bank of Dubai said. That will leave oil markets grasping with additional volatility as they assess the negative impact on global trade of the tariffs announced by the Trump administration.

Pakistan also struggles

The Pakistan Stock Exchange dropped by about 2.5 per cent on Monday, with Islamabad facing 29 per cent tariffs from the US.

"We may face this situation until the uncertainty ends at the global market, said Mohammed Sohail, the chief executive at Topline Securities.

Pakistan's Finance Minister Muhammad Aurangzeb said over the weekend that Islamabad will send a delegation to the United States soon to negotiate. The US imports around $5 billion worth of textiles and other products from Pakistan, which heavily relies on loans from the International Monetary Fund and others.