Gulf stock markets dived in early trade on Monday, extending their losses from the previous session amid falling oil prices after Saudi Arabia opened the taps in a price war with Russia.
Saudi Arabia slashed its official selling price (OSP) for crude for April and plans to raise its production significantly next month after the Organization of the Petroleum Exporting Countries' pact with Russia to curb oil output fell apart on Friday.
The kingdom's move sent oil prices plummeting around 30%.
"The Saudi reaction to the breakdown was to revert to the 2014 playbook," said Akber Khan, head of asset management at Al Rayan Investment in Doha. "By precipitating an oil price collapse they are looking to end their subsidy of higher cost producers. This is a painful strategy that requires time to play out and failed on the previous attempt," Khan added.
Saudi Arabia, Russia and other major producers last battled for market share like this between 2014 and 2016 to try to squeeze out production from the United States
Saudi Arabia's benchmark index .TASI was down 9.1% at 6,220 points, its lowest in around four years.
State-owned Saudi Aramco 2222.SE, which traded below its initial public offering price of 32 riyals for the first time on Sunday, fell another 10% to 27 riyals ($7.20).
Al Rajhi Bank 1120.SE and the country's largest lender National Commercial Bank 1180.SE fell 9.2% and 9.9% respectively.
"We have low oil prices, low demand, and slowing world activity caused by the coronavirus. So, nothing could support the shares in today's trading," said Mohamed Zidan, chief market strategist in ThinkMarkers.
The Dubai index .DFMGI declined 8.8%, its sharpest daily fall since March 2006. Dubai Islamic Bank DISB.DU and Emirates NBD Bank ENBD.DU both shed 10%.
Air Arabia AIRA.DU fell 7% after Saudi Arabia suspended travelling from UAE.
Abu Dhabi's index .ADI was down 7.7%, its biggest intra-day loss since November 2009. Market heavyweight First Abu Dhabi Bank FAB.AD plunged 10%.
The Qatari index .QSI dropped 8.6%, the biggest single day loss in more than 11 years. the Gulf's largest lender, Qatar National Bank QNBK.QA dived 8.7%.
Kuwait's premier index .BKP dived 10% triggering trading suspension for the rest of the session.
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