As a direct result of the escalating tensions in the Middle East brought about by the US' latest airstrike that killed Iran's top commander, Saudi Arabian and Kuwaiti stocks declined to new lows. Saudi Aramco shares fell by about 1.7 percent to its lowest level since it launched its initial public offering (IPO) last month.
The rising Iran-US tensions and the uncertainty in the region brought down Saudi Aramco's stocks to 34.55 riyals per share in late afternoon trading on Sunday, its lowest point since its listing. Inventor confidence fell to an all-time low in the region as the killing of Iranian military commander Qassem Soleimani could possibly lead to an all-out firing war.
The US had launched a drone strike on Friday at the Baghdad International Airport, killing Soleimani and Iraqi militia commander Abu Mahdi al-Muhandis. The architect of Tehran's overseas military operations was on his way to meet with al-Muhandis at the airport with a convoy of military personnel.
Following the attack, Iranian Supreme Leader Ayatollah Ali Khamenei vowed to dish out a "harsh revenge" against the United States and its allies. The United States' airstrike was a direct response to the attack on the country's embassy in Baghdad perpetrated by Iran-backed militias.
Further escalation in the conflict could potentially disrupt the supply of oil in the region. Apart from Saudi Aramco's shares, other indexes in the region also plummeted. The Kuwaiti Index, which was the best performing index in the region last year, dropped by 4.1 percent following the attack. Meanwhile, Saudi Arabia's Tadawul All Share Index (TASI) plummeted by 2.2 percent.
Dubai's DFMGI went down 3.1 percent, while the Abu Dhabi index fell by 1.41 percent. Major equities also suffered massive drops following the attack, including Emaar Properties, which fell by 3.7 percent. Banking stock also experienced massive drops in the days following the strike, with Samba Financial Group down 3 percent and Al Rajhi Bank down 2 percent.
Economists have pointed out that an all-owned US-Iran was could potentially drop the global GDP by 0.5 percent points as an all-out assault by the US could collapse Iran's economy. The drop in the global economy could also partly be a direct result of surging oil prices around the world.
After reports of Soleimani's death had spread, global oil prices surged to new highs. Oil prices LCOc1 jumped to $63.05 a barrel in late Friday. Brent Crude futures surged to $68.90 per barrel, while US West Texas Intermediate (WTI) rose to $63.84 a barrel.
