Financial markets are seeking more clarity on the status of communications between Washington and Tehran as Trump has suggested a ceasefire could be reached quickly, but also reportedly said the U.S. could seize Kharg Island.
Iran has described U.S. proposals to end the war as "unrealistic, illogical and excessive."
Dubai's main share index (.DFMGI), opens new tab dropped 1.2%, dragged down by a 2.9% slide in blue-chip developer Emaar Properties (EMAR.DU), opens new tab and a 2.5% decrease in major bank Emirates NBD (ENBD.DU), opens new tab.
In Abu Dhabi, the index (.FTFADGI), opens new tab lost 0.7%, hit by a 1.3% slide in Abu Dhabi Commercial Bank (ADCB.AD), opens new tab and a 4.9% plunge in Abu Dhabi Ship Building (ADSB.AD), opens new tab.
Meanwhile, shares in Fertiglobe (FERTIGLB.AD), opens new tab, a producer of ammonia and urea, jumped 7%.
Emirates Global Aluminium, the Middle East's largest producer of the metal, said on Saturday that its Al Taweelah production base in the UAE had suffered significant damage in Iranian missile and drone attacks. Aluminium Bahrain (Alba) (ALBH.BH), opens new tab, which operates the world's largest single-site smelter, said on Sunday it was assessing damage from the strikes. Alba shares were down 0.1%.
GCC stock markets may remain under pressure in the near term as geopolitical uncertainty keeps sentiment fragile and volatility elevated, said Daniel Takieddine, Co-founder and CEO, Sky Links Capital Group.
"Elevated oil prices may provide a partial buffer, but constrained export volumes could limit the extent of this support."
Saudi Arabia's benchmark index (.TASI), opens new tab advanced 0.8%, led by a 1.4% rise in Al Rajhi Bank (1120.SE), opens new tab and a 1.1% increase in oil giant Saudi Aramco (2222.SE), opens new tab.
Elsewhere, ADES Holding (2382.SE), opens new tab added 1.7%, after the oil drilling group beat analyst expectations with a 2% rise in annual net profit and reiterated its strong growth forecast for this year despite some rig suspensions last year and recent halts due to the war.
Saudi crude exports redirected from the Strait of Hormuz to the Yanbu port in the Red Sea reached 4.658 million barrels per day last week, according to Kpler data, easing some concerns around supply disruption.
The supportive backdrop of higher oil prices is helping to underpin the stock market, particularly as the country sustains exports through the Yanbu port, said Takieddine.
Oil prices extended gains on Monday, with Brent headed for a record monthly rise.
The Qatari index (.QSI), opens new tab declined 0.9%, with the Gulf's biggest lender Qatar National Bank (QNBK.QA), opens new tab retreating 1.1%.
Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab finished 2.6% lower.
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