Gulf Stock Crash: Saudi-Emirati Dispute & Economic War Fears

Billions of dollars evaporate in a few hours Of the funds of Gulf investors, after the Dubai index recorded a collapse of two percent, accompanied by a decline of the Saudi and Emirati indices by one percent each, in the first direct economic clash resulting from the political tension between Riyadh and Abu Dhabi over Yemen.

Gulf trading halls witnessed Hysterical selling wave Following the Kingdom’s announcement of launching air strikes on the positions of the southern separatists supported by the UAE, Saudi Arabia declared that “its national security is a red line,” demanding that the Emirati forces respond to the demands of the Yemeni Presidential Command Council to leave the country.

According to data from the London Stock Exchange Group, The Dubai index achieved the worst daily performance Since the sixth month of this year, while the shares of major companies witnessed sharp declines: Emaar Properties fell 2.8 percent, Dubai Islamic Bank fell 2.3 percent, and Saudi Arabia Mining fell 2.6 percent, while Aramco and Al Rajhi Bank shares recorded slight declines.

The roots of the crisis extend deep In the Yemeni conflict that has been ongoing since 2014, the recent attacks by the Southern Transitional Council against Saudi-backed government forces have put the two Gulf allies on the verge of a comprehensive confrontation in Yemen, especially after the raid on the port of Mukalla, which sparked severe Emirati dissatisfaction.

Abu Dhabi expressed its “deep regret over the Saudi statement” and its “surprise with the air strike,” in statements that reflect the depth of the rift between the two capitals over the management of the Yemeni file, while global markets are watching with concern the developments of the crisis amid the stability of oil prices despite the escalation of geopolitical tension.

Investors face a difficult equation: Hopes for peace between Russia and Ukraine are receding on the one hand, and a new crisis is erupting in the heart of the largest oil-producing region in the world on the other hand, which puts their money in front of growing risks that may reshape the map of Gulf investments.