Gulf markets fall as fresh Houthi strikes on Saudi Arabia raise regional risk

Gulf stock markets experienced a decline on Thursday following fresh Houthi attacks on Saudi Arabia, which raised concerns about the potential escalation of the conflict. The U.S. State Department instructed several diplomats and their families to evacuate its missions in Saudi Arabia, with plans to remove family members from other U.S. missions in the region.

Saudi Arabia's benchmark index suffered its largest weekly loss in over two years, dropping by 2.3%, with major lenders like the Saudi National Bank and oil giant Saudi Aramco also facing significant declines. In response, Riyadh launched a series of strikes on Houthi missile launcher sites and claimed to have intercepted many of the group's ballistic missiles.

While UAE's main index and Abu Dhabi's index also experienced a dip, geopolitical uncertainty and threats to energy flows through the Strait of Hormuz kept investors cautious. Reports of U.S. troops and diplomats leaving Middle East posts further fueled fears of re-escalation and retaliation. Iran's Islamic Revolutionary Guard Corps Navy reported hitting and setting fire to four vessels involved in illegal oil transfers, while Iranian media separately claimed explosions of unknown origin in southern Iran.

Qatar's index also saw a slight decline, while Egypt's blue-chip index suffered its biggest intraday drop in over a year, with most of its constituents performing poorly.