Gulf equities mixed as Saudi energy, shipping security concerns weigh

Gulf stock markets saw a mixed performance on Monday, as investors grappled with the impact of escalating attacks on Saudi Arabia’s energy infrastructure and shipping routes. The Saudi benchmark index managed to recover from early losses, edging up by 0.1%, buoyed by a 1.8% gain in Al Rajhi Bank shares. Arabian Drilling also performed well, surging 3% following the signing of a five-year gas-drilling contract valued at approximately $532.5 million.

However, not all sectors fared as well. Oil major Saudi Aramco saw a slight decline of 0.2%, while Saudi Arabian Mining Company and Saudi Basic Industries Corp dropped by 1.5% and 1.9%, respectively. The top loser on the index was Riyadh Cement, which fell by 4.9% after trading ex-dividend.

Risk sentiment faced a setback following a drone strike that temporarily halted Saudi Arabia’s East-West oil pipeline, a crucial route that bypasses the Strait of Hormuz and transports up to 4% of the world's oil supply. Reports indicated that the disruption might limit Yanbu port inventories to supporting exports for only five to seven days if the issue persists. The situation was further complicated by reported Houthi strikes in southern Saudi Arabia and additional attacks on vessels near the Strait of Hormuz.

Additionally, Saudi Arabia sought to postpone a planned meeting between Iran and Gulf states in Oman, as announced by Iran’s foreign ministry. In a separate incident, footage released by Saudi state media on Sunday showed damage to homes and a mosque in Jazan province, which they attributed to a Houthi attack. The Houthis also claimed responsibility for targeting a Saudi military base in a neighboring region.

Maritime security concerns were heightened after a vessel in the Strait of Hormuz was hit by a projectile, causing a fire and forcing the crew to abandon ship, according to the UK Maritime Trade Operations agency. Despite these challenges, Dubai’s main share index managed to rise by 0.5%, driven by a 6.4% increase in blue-chip developer Emaar Properties, which disclosed that its board would meet on Wednesday to discuss strategies for improving shareholder returns and capital allocation.

In Abu Dhabi, the index experienced a slight gain of 0.1%, aided by a 6.5% jump in Space42 shares following the agreement between the firm and California-based Viasat to establish Equatys. This venture aims to develop a direct-to-device satellite communications platform, with up to $1 billion committed to the project. Outside the Gulf region, Egypt’s blue-chip index declined by 1.6%.