RIYADH: Saudi Arabian Oil Co.’s share price surged by 3.37 percent on March 1, outperforming regional markets as escalating tensions in the Middle East weighed on Gulf equities.
According to data from Tadawul, the stock price climbed to SR25.80 ($6.88) from the previous close of SR24.96.
Nearly 21 million shares were traded, with turnover exceeding SR535 million.
The gains came even as most Gulf markets declined after Israel and the US launched strikes on Iran, triggering retaliatory attacks and raising fears of a broader regional conflict.
The Kingdom’s Tadawul All Share Index declined by 2.18 percent to 10,475.55, with the benchmark index recording a total trading turnover of SR5.37 billion.
Saudi Arabia’s parallel market Nomu also edged down by 0.86 percent to close at 22,598.02.
Elsewhere in the region, Boursa Kuwait suspended trading as a precautionary measure. Oman’s main index trimmed losses to 1.42 percent after falling more than 3 percent earlier, while Bahrain’s benchmark slipped 0.99 percent. Qatar’s market was closed for a bank holiday.
Investors are now closely watching oil markets, particularly the Strait of Hormuz, a key shipping route that carries about 15 million barrels of crude per day, nearly 30 percent of global seaborne oil trade.
“The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz,” said Jorge Leon, senior vice president and head of geopolitical analysis at Rystad Energy.
“Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil at the start of the week,” he added.
Leon said some supply could be rerouted through alternative pipelines, including Saudi Arabia’s East-West pipeline to the Red Sea, which has a capacity of about 5 million barrels per day, and the UAE’s Abu Dhabi pipeline, with a capacity of around 1.5 million bpd. Even so, he estimated the disruption could temporarily remove 8 million to 10 million bpd from global supply.
Barclays raised its Brent crude forecast to about $100 a barrel from $80 a day earlier, while analysts expect prices could jump by as much as $20 per barrel when trading resumes on March 2 if tensions escalate further, Reuters reported.
“Should the Strait remain effectively closed or energy infrastructure be confirmed as damaged, the upside risks to prices would increase further,” Leon said.
Even a short disruption in Hormuz traffic could lead to tanker delays, cargo rescheduling, and supply bottlenecks, keeping energy markets volatile in the near term.
Tony Hallside, CEO of STP Partners, told Arab News that markets across the Gulf are entering the week in a “far more cautious posture” as investors reassess geopolitical risk and its potential implications for energy flows and regional stability.
“The Strait of Hormuz remains the key variable and unlike other recent disruptions in the region, it represents a critical artery for global oil supply with no immediate alternative, which naturally elevates the risk premium embedded in crude prices,” said Hallside.
Echoing similar views, Vijay Valecha, chief investment officer at Century Financial, told Arab News that the escalating tensions between the US, Israel and Iran are materially increasing geopolitical risk, and financial markets are already “pricing in a pronounced war premium.”
The Century Financial official further said that the regional impact across economies in the Gulf Cooperation Council region is expected to be mixed, amid escalating tensions.
According to Valecha, any threat to Iranian oil exports or regional shipping routes could push Brent toward the $95 to $110 range.
“Capital flows are likely rotating toward defensive and safe-haven assets. Investors are likely to reduce exposure to risk assets and reallocate toward gold, the US dollar, Swiss franc, and Japanese yen, signalling a broader risk-off environment,” said Valecha.
He added: “Elevated oil prices provide a fiscal cushion for producers such as Saudi Arabia and Qatar, strengthening revenues and liquidity. However, trade, logistics and tourism, particularly in the UAE, would face pressure if shipping risks rise or regional sentiment weakens.”
Higher crude prices would have global macro implications, particularly via inflation, potentially delaying anticipated rate cuts and tightening global financial conditions.
“While firmer oil prices may provide a temporary fiscal buffer for major producers, equity markets, particularly those with significant foreign participation such as the UAE and Saudi Arabia, are likely to experience heightened volatility in the near term,” said Hallside.
He added: “The overarching theme is not panic, but prudence, as investors weigh the duration of the current tensions and their potential impact on trade, capital flows and business continuity across the region.”
According to Valecha, at the sector level, energy and petrochemical stocks are likely to remain resilient, benefiting from stronger pricing, while real estate, consumer discretionary, banking, and capital market activity could see profit-taking amid heightened uncertainty.
“Overall, markets are transitioning into a volatility-driven environment marked by defensive positioning, tighter liquidity expectations and selective sector outperformance,” added the Century Financial official.
Meanwhile, the International Energy Agency said that it is closely watching Middle East developments for their impact on global oil and gas markets.
According to Fatih Birol, the executive director of the IEA, market supplies have been stable so far.
Birol added that communications are ongoing with major energy producers and ministers in the region to assess the situation’s impact on trade flows.
In another major development, OPEC+ countries decided to resume the unwinding of the 1.65 million bpd of additional voluntary adjustments announced in April 2023 and agreed on a production adjustment of 206,000 bpd.
