Gulf markets slide as U.S.-Iran conflict ripples across region

[Kingdom of Saudi Arabia, Riyadh, King Abdullah Financial District January 31, 2020 Large buildings equipped with the latest technology]
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Stocks in Saudi Arabia and Egypt declined Sunday, offering an early indication that escalating hostilities between the US and Iran are spilling into regional financial markets.

Saudi Arabia’s Tadawul All Share Index dropped 2.2%, its steepest one-day fall since April, wiping out its gains for the year. Losses were tempered by a 3.4% rise in state oil giant Saudi Aramco, which accounts for roughly 16% of the benchmark. Investors pushed the shares higher on expectations that crude prices will climb when global trading resumes in Asia.

Egypt’s main stock gauge fell 2.5%, deepening a slide that began in mid-February as fears of a broader conflict intensified. The index is now down more than 8% over that period.

Elsewhere in the Gulf, equities in Oman and Bahrain also retreated, while Kuwait suspended trading as a precaution. Israel’s market was closed Sunday following its recent shift to a Monday-through-Friday trading week.

Egypt has been particularly exposed to the latest tensions. The Egyptian pound ranked among the world’s weakest currencies last week and slid to about 48.8 per dollar on Sunday, its lowest level since mid-2025.

The country’s economy has already been strained by disruptions tied to the Israel-Hamas war, which have diverted shipping away from the Suez Canal, a key source of hard-currency revenue. Fresh pressure emerged after Israel halted natural gas exports to Egypt following joint US-Israeli strikes on Iran. Tehran responded with attacks across the Gulf and on Israeli targets.

Egypt, which had been importing roughly 1 billion cubic feet of Israeli gas per day, is now seeking additional liquefied natural gas cargoes ahead of peak summer demand.

The renewed turmoil threatens what had been a tentative recovery in Suez Canal traffic after an October ceasefire in Gaza. French shipping giant CMA CGM said Sunday it had paused transits through the waterway, underscoring the broader economic risks for a region already on edge.

MORE ON FRANKLIN FTSE SAUDI ARABIA ETF, ISHARES MSCI SAUDI ARABIA ETF, ETC.

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* Trump confirms U.S. began major combat operation against Iran [https://seekingalpha.com/news/4558949-trump-confirms-us-began-major-combat-operation-against-iran]