Gulf stocks advance on Iran de-escalation hopes; Saudi ends flat after oil-site attacks

Gulf equities closed higher on Monday as hopes of a diplomatic off-ramp in the U.S.-Iran war lifted investor sentiment across the region, although recent attacks on Saudi oil facilities tempered gains in the Gulf’s largest market.

Investor sentiment found support after Tehran said it would halt attacks provided Washington refrains from further strikes, following the Pentagon’s decision to pause its 13-night campaign late on Friday.

The prospect of easing hostilities alleviated some concern over supply disruptions and raised hopes that shipping through the Strait of Hormuz could eventually resume, dragging oil prices to a one-week low of $89.23 a barrel by 1102 GMT.

Dubai’s benchmark index rose 1%, its strongest session in nearly a month, with gains consolidated in real estate.

Blue-chip developer Emaar Properties climbed 2%, while Emirates NBD gained 0.5%, extending gains for a third straight session after reporting quarterly results last week.

In Abu Dhabi, the index gained 0.2%, supported by a 0.7% rise in Aldar Properties ahead of its second-quarter earnings on Tuesday.

Saudi Arabia’s benchmark index closed flat, giving up early gains and after touching a two-week high earlier in the session, hit by materials weakness.

Arabian Cement tumbled 5.7% after reporting a nearly 50% quarter-on-quarter plunge in second-quarter profit.

The subdued finish reflected a tug-of-war between hopes for a diplomatic resolution to the U.S.-Iran conflict and renewed concerns over the security of the kingdom’s energy infrastructure following attacks on Saudi Aramco’s facilities in Jizan and Yanbu.

Two Asia-based trading sources said they had been informed of potential damage to fuel and oil storage sites at Jizan. In Yanbu, two missiles aimed at oil installations were intercepted.

Yanbu, Saudi Arabia’s main Red Sea oil port, has become an increasingly important route for crude shipments bypassing the Strait of Hormuz, which Iran has blockaded.

Saudi Aramco, the biggest company in the main index by market value, shed 0.2%.

Limiting losses, healthcare heavyweight Dr Sulaiman Al Habib surged 3.8% to its highest level since early May after announcing a record dividend.

Qatar’s benchmark index rose 0.8%, supported by financial stocks following strong earnings.

Qatar National Bank , the region’s largest lender, gained 2.1% in an attempt to snap a five-week losing streak, while Qatar Islamic Bank jumped 2.5% to its highest level in nearly a month.

The retreat in crude prices also briefly eased expectations for a rate hike from the U.S. Federal Reserve this week. By Monday, money markets were again showing a chance of around 34%, little changed from Friday.

With most Gulf currencies pegged to the U.S. dollar, the spectre of higher U.S. interest rates continues to hang over the region, threatening to keep borrowing costs elevated, even as investors bet that easing geopolitical tensions will limit the economic fallout from the conflict in the longer run.

Outside the Gulf, Egypt’s blue-chip index gained 0.4%, supported by a 0.9% rise in Commercial International Bank , while Abu Dhabi Islamic Bank Egypt soared 4.8% to a record high.