Stock markets across the Middle East collapsed as the lifting of economic sanctions against Iran threatened to unleash a fresh wave of oil onto global markets that are already drowning in excess supply, reports The Telegraph.
All seven stock markets in Gulf states tumbled as panic gripped traders. Dubai’s DFM General Index slumped 4.8 per cent to 2,682.56, while Saudi Arabia’s Tadawul All Share Index collapsed by 7 per cent to 5,409.35, its lowest level in almost five years.
The Iranian stock index gained 1 per cent, making it one of the best performing markets in the world with gains of 6 per cent since the start of the year.
The dramatic moves came following the historic report from the UN nuclear watchdog, which showed that Iran has met its obligations under the nuclear deal, clearing the way for the lifting of sanctions.
Qatar’s index fell 6.7 per cent, while Abu Dhabi’s stocks tumbled 4.5 per cent to the lowest level since November 2013. Oman’s shares were down 3.2 per cent, the most since December 2014, and Bahraini equities edged 0.5 per cent down.
The stock markets in Dubai and Saudi Arabia have been plunged into a painful bear market, losing 42 per cent and 38 per cent respectively, ever since Saudi Arabia decided to ramp up oil production in November 2014.
Oil prices fell below $30 for the third time last week as traders prepared for the prospect of Iranian oil flooding global markets.
The Islamic Republic has vowed to return its oil production to pre-sanction levels, with estimates suggesting Tehran will add a further 500,000 barrels a day (b/pd) to the world’s bloated stockpiles within weeks.
Fears that the Islamic Republic could quickly ramp up production sent Brent crude falling by 3.3 per cent to $29.43 – matching lows last seen in 2004.
West Texas Intermediate also slipped back to $29.60, a decline of 4.5 per cent.
Oil has shed more than 75 per cent since last summer – a post war record – as over-supply and fears over global economic growth has depressed traders.
The relentless fall in prices is set to see oil finish the week at its lowest level in 12 years.
