Mideast Stocks, Aramco Sink on Twin Threat From Tariffs, Oil - Bloomberg

Mideast Stocks, Aramco Sink on Twin Threat From Tariffs, Oil - Bloomberg

Main equity benchmarks in Middle East countries including Saudi Arabia sank the most since 2020 on Sunday as investors reacted to the risks of a fresh global trade war and depressed oil prices.

Stocks on the kingdom’s main exchange fell as much as 6.1%, while gauges in Qatar and Kuwait dropped more than 5.5%. Equities in Tel Aviv dropped the most since October 2023, when Hamas launched the deadly attack on Israel that sparked the start of the war in Gaza. All four stock markets were closed on Friday.

Saudi Aramco — the world’s biggest oil exporter — was one of the biggest losers in the region. The company at one point erased more than $90 billion from its market capitalization.

Regional losses mounted following the global market rout that began last week after US President Donald Trump rolled out the highest tariffs in over a century on its trading partners. Investor anxiety and the threat of further declines across asset classes remain high after China retaliated with its own tariffs on Friday.

That adds to risks of a broader trade war and tit-for-tat measures that may roil supply chains and slow economic growth.

“In the short term, regional stock markets in the GCC are not immune to global sentiment,” said Fadi Arbid, founding partner and chief investment officer at Amwal Capital Partners Limited. “We have seen it many times in the past like the global financial crisis, Covid, etc. The correlation is there.”

Further threatening stocks in the Middle East is the potential for a sustained period of lower oil prices. Brent crude tumbled 13% on Thursday and Friday as OPEC+ added to market chaos with a plan to boost supply by triple what was originally intended in May.

The surprise boost, combined with demand pressure from US tariffs and trade wars, points to growing oversupply and increasing downside risk to prices, according to Bloomberg Intelligence analysts Salih Yilmaz and Will Hares.

Depressed crude markets put Middle East finances at risk as many countries require elevated prices to back spending and investment on their economic diversification strategies. Saudi Arabia, for instance, needs oil above $90 a barrel, according to the International Monetary Fund. Iraq also needs prices above $90 a barrel, while Kazakhstan would need it to be more than $115 a barrel, the IMF estimates.

Lower oil prices have already been squeezing Saudi finances in recent years, resulting in budget deficits and adjustments to spending on projects related to Crown Prince Mohammed bin Salman’s diversification agenda.

A renewed decline in oil revenues across the GCC risks slowing regional economic transformation plans and spending on mega projects, especially in the kingdom, according to Amwal’s Arbid.

He doesn’t expect any direct impact from the 10% tariff imposed by the US on GCC countries, noting the level is “low” and that political alignment with the US is “very strong.”

Trump is due to meet with Israeli Prime Minister Benjamin Netanyahu on Monday in Washington to discuss the possibility of a better tariff deal for the country. The US president is also expected to visit Saudi Arabia in the near future, in what would be his first international trip since returning to the White House in January.

Saudis Slash Oil Prices to Asia After Surprise Output Hike - Bloomberg

Saudis Slash Oil Prices to Asia After Surprise Output Hike - Bloomberg

Saudi Arabia slashed its flagship oil price by the most in more than two years, just days after the OPEC+ alliance announced an unexpectedly large output hike.

State producer Saudi Aramco will lower Arab Light crude to its biggest buyers in Asia by $2.30 a barrel for May, according to a price list seen by Bloomberg.

While the large reduction comes on the back of some of the kingdom’s biggest price increases in years, the move was still bigger than expected in a survey of traders and refiners. It follows an OPEC+ output increase that delegates privately said was intended to instill better discipline among members like Kazakhstan and Iraq.

OPEC+, in which Saudi Arabia plays a leading role alongside Russia, announced on April 3 that it would add more than 400,000 barrels a day back into the global market next month, a supply boost three times larger than previously signposted. The shock move deepened a rout in oil prices, which tumbled more than 10% last week after trade tariffs announced by US President Donald Trump threatened the global economy.

The extra output from May will come on top of an increase from the Organization of the Petroleum Exporting Countries this month, as it begins to unwind some of its production curbs imposed in 2022. It also plans further small increments in coming months.

Accelerating supply at a time of concerns over demand came as a surprise for many marketwatchers, given Saudi Arabia needs crude at above $90 a barrel to balance its spending. Oil in London dropped below $65 on Friday, the lowest in four years.

Trump has pressed OPEC+ “to cut the price of oil,” which he says is needed to reduce inflation and heighten pressure on Russia to help end the war in Ukraine.

The Kingdom also reduced prices to the US and Europe, though the reduction was much smaller than for Asian buyers. European prices fell 50 cents for all grade, wihle those to the US were cut by 20 cents.

Gulf bourses sink as recession worries sparked by US tariffs mount | Reuters

Gulf bourses sink as recession worries sparked by US tariffs mount | Reuters

Stock markets in the Gulf fell sharply on Sunday as U.S. President Donald Trump's drastic trade tariffs and countermeasures from China stoked fears of a trade war and the prospect of a global recession.

China's finance ministry said on Friday it will impose additional 34% tariffs on all U.S. goods from April 10 as a countermeasure to sweeping tariffs imposed by Trump.

Saudi Arabia's benchmark index (.TASI), opens new tab plunged 6.8% - its biggest intraday fall since May 2020 - dragged down by a 5.9% decline in Al Rajhi Bank (1120.SE), opens new tab and a 6.8% retreat in the country's largest lender Saudi National Bank (1180.SE), opens new tab.

Among other fallers, oil giant Saudi Aramco (2222.SE), opens new tab was down 5.3%, its biggest daily slide since the early days of the 2020 COVID-19 pandemic.

Oil prices - a catalyst for the Gulf's financial markets - plummeted 7% on Friday to a three-year low as China's tariff hikes on U.S. goods intensified the trade war, and as OPEC+ unexpectedly sped up oil output hikes.

Trump's Wednesday tariff announcement shook global stock markets, wiping out $5 trillion in value for S&P 500 index (.SPX), opens new tab companies by Friday's close, a record two-day decline.

China said on Saturday "the market has spoken" in rejecting Trump's tariffs, and called on Washington for "equal-footed consultation" after global markets' dramatic reaction to the trade levies, which drew Chinese retaliation.

In Qatar, the index (.QSI), opens new tab - which resumed trading after a five-session Eid break - tumbled 4.2%, with petrochemical maker Industries Qatar (IQCD.QA), opens new tab diving 8.2% and the Gulf's biggest lender Qatar National Bank (QNBK.QA), opens new tab down 4%.

Elsewhere, Kuwait's stock market (.BKP), opens new tab ended 5.7% lower.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab dropped 3.3%, with Talaat Moustafa Group (TMGH.CA), opens new tab closing 4.5% lower.