Gulf markets are splintering as the Iran war continues

Markets across the Gulf region have diverged sharply since the Middle East conflict began, as investors traverse big swings in energy prices and markets remain rattled by geopolitical turmoil.

Saudi Arabia and Oman have both outflanked other regional indices, with Oman’s index surging 9.3% since March 1, the day after the war began on Feb. 28, while the Saudi Tadawul has advanced 5.8%. In contrast, Dubai’s DFM General Index has plunged nearly 16% over the same period, with Qatar sliding 4% and Bahrain’s BAX falling 7.2%.

Saudi’s index, which is closely correlated to energy markets, has been turbo-charged by the spike in oil prices, while Oman has benefitted from investors seeking safe havens, according to Damanick Dantes, founder of Dantes Outlook.

In contrast, the United Arab Emirates, which Dantes said is more sensitive to real-estate markets and broader geopolitical events, has been hit hardest.

Speaking with CNBC’s “Access Middle East” on Thursday, Dantes said the elevated oil price remains a net positive for Saudi Arabia, where a small handful of large energy companies dominate the market.

He highlighted Saudi Aramco’s ability to export oil not via the Strait of Hormuz — the crucial shipping channel that has emerged as a critical flashpoint of the conflict — but via pipelines into the Mediterranean.

“I think [oil] hovering above $80 a barrel is a net positive for Saudi and other energy companies within the region,” Dantes added. The price of Brent crude has hovered around $100 a barrel for the last week and on Friday afternoon sat at $110 per barrel. U.S. West Texas Intermediate futures with May delivery also remain firmly above $95.

Oman, meanwhile, has been boosted by a regional safe-haven bid. Dantes said the country’s Vision 2040, which includes efforts to reduce dependency on oil, has drawn investors amid the upheaval.

Dubai’s index edged slightly higher this week, notching 4.2% on Wednesday, its biggest intraday advance since December 2024, powered by gains in real estate and bank stocks. It closed 2.4% up for the week.

Dantes urged investors in the Middle East to tread with caution and be wary of rebounds that may be short-term.

“This is not the time to take excessive risk in your portfolio,” Dantes said. “What we’re focusing on are quality assets that have more resiliency to outperform in a down-to-uncertain market environment.”

That said, there are still pockets of opportunities to take risks, he added. He pointed to continued investor interest in Saudi Arabia’s pre-IPO space, where investors’ risk tolerance remains comparatively high, and where many companies are still focused on coming to market, despite potential vulnerabilities.

“You don’t want to be too defensive because anything can happen,” Dantes said of the prevailing environment. “You can have a resolution that would spring a huge rebound.”

Fahd Iqbal, head of…