Most Gulf markets slip as geopolitical risks weigh

Most Gulf stock markets closed lower on Tuesday as investors balanced geopolitical risks tied to US-Iran talks and ongoing Strait of Hormuz disruptions against easing oil supply concerns and stronger risk sentiment.

In Qatar, the index fell 0.3%, dragged down by a 0.9% decline in Gulf lender Qatar National Bank .

Abu Dhabi’s index slipped 0.1%, while Dubai’s main share index ended flat.

Sentiment was supported in part by data showing Gulf oil flows excluding Iran rose in September to more than 81% of pre-war levels, led by a recovery in Saudi exports.

The rebound came despite attacks on the kingdom’s oil infrastructure and a wave of Iranian strikes on regional shipping, while Iran’s own exports fell to zero under a US blockade.

Investors remained focused on geopolitical developments and US-Iran talks. Stalled diplomacy could continue to weigh on sentiment, especially if maritime disruptions in the Strait of Hormuz persist, said Daniel Takieddine, Co-founder and CEO of Sky Links Capital Group.

Still, he said strong local fundamentals and the upcoming third-quarter earnings season should continue to support regional markets.

Saudi Arabia’s benchmark index outperformed, rising 1.1%, helped by a 1% gain in Al Rajhi Bank, while oil giant Saudi Aramco added 0.9%.

Saudi sentiment was also aided by developments in Yemen, after Riyadh said Saudi-backed Yemeni forces advanced on Monday to recapture coastline along the Bab el-Mandeb Strait up to the port city of Mocha, pushing Houthi forces out of most areas seized last month.

Broader risk appetite improved after US data released on Friday showed job growth slowed more than expected in September, while nonfarm payrolls for the previous two months were revised lower, reducing expectations of a near-term Federal Reserve rate hike.

Still, traders have not ruled out further tightening, with CME’s FedWatch Tool indicating an 87% chance of a rate increase in December. Gulf markets tend to track shifts in US monetary policy expectations because most regional currencies are pegged to the dollar.

Outside the Gulf, Egypt’s blue-chip index fell 0.5%, with Commercial International Bank down 0.7%.