Gulf markets experienced gains following the announcement of increased oil production by OPEC+, with investors keeping a close eye on the deadline for potential US tariffs.
In a complex landscape of U.S. tariff decisions, OPEC+ oil production output, and geopolitical tensions, Gulf stock markets have displayed a mix of gains and losses this week.
U.S. tariff uncertainty has been the predominant near-term concern, leading to cautious or mixed trading in the region. The impending expiration of a 90-day U.S. tariff pause on July 9 has caused some profit-taking and overall cautiousness in markets in the days leading up to it. However, a recent trade deal between the U.S. and Vietnam, reducing threatened tariffs from 46% to 20%, boosted investor sentiment and helped rally Gulf markets.
The oil sector remains a key driver of Gulf markets, with oil futures edging up amid expectations of continued or increased supply from major producers. The oil sector has seen positive movement, with some firms securing large contracts and benefiting from contract extensions related to oilfield services.
Geopolitical issues, such as Iran’s suspension of cooperation with the UN nuclear watchdog, have added some risk aversion to Gulf markets. However, this has not caused major market disruptions recently, as domestic non-oil sector growth in countries like Saudi Arabia supports market resilience.
Saudi Arabia's benchmark index closed 1% higher, with Acwa Power contributing to the rise with an 8% rally. Saudi Arabia's market was lifted by the oil sector and non-oil private sector growth, but the country remains cautious ahead of the U.S. tariff deadline. Other key players in the Gulf region, such as the UAE (Abu Dhabi and Dubai), Qatar, Egypt, Oman, and Kuwait, have shown mixed results, with price movements sensitive to U.S. trade developments, oil market changes, and geopolitical risks.
The UAE's key developers have been impacted by tariff uncertainty, but new industrial acquisitions in Abu Dhabi and the progression of innovative transport projects despite market caution have provided some positive signs. Qatar, Egypt, Oman, and Kuwait have not shown significant specific data in the search results, but they generally reflect Gulf-wide caution.
In the energy sector, oil giant Saudi Aramco has seen positive movement, with the company looking to sell up to five gas-fired power plants, which could generate tens of billions of dollars. Acwa Power has also signed initial agreements with Indonesia’s sovereign wealth fund and state energy firm Pertamina to explore renewable energy projects potentially worth up to $10 billion.
This complex environment means Gulf stock markets are trading with some caution but remain supported by strong domestic economic indicators and the strategic importance of the energy sector. The Bahrain Bourse was closed for a public holiday, and OPEC+ plans to raise oil production output next month. Gulf stock markets ended higher on Sunday.
- The impending expiration of the 90-day U.S. tariff pause on July 9 has triggered some profit-taking and overall cautiousness in the Gulf markets.
- A recent trade deal between the U.S. and Vietnam has reduced threatened tariffs from 46% to 20%, boosting investor sentiment and helping rally Gulf markets.
- OPEC+ oil production output and geopolitical tensions are contributing to a complex landscape that is causing Gulf stock markets to display a mix of gains and losses.
- The oil sector remains a key driver of Gulf markets, with oil futures edging up amid expectations of continued or increased supply from major producers.
- The UAE's key developers have been impacted by tariff uncertainty, but new industrial acquisitions in Abu Dhabi and the progression of innovative transport projects despite market caution have provided some positive signs.
- In the energy sector, oil giant Saudi Aramco is looking to sell up to five gas-fired power plants, which could generate tens of billions of dollars.
- Acwa Power has signed initial agreements with Indonesia’s sovereign wealth fund and state energy firm Pertamina to explore renewable energy projects potentially worth up to $10 billion, indicating a shift towards more diversified assets in the Gulf markets. Additionally, the volatile weather conditions can also have an impact on certain sectors, such as agriculture, in the region, thus adding another layer of uncertainty in the financial landscape.
