Stock markets in the Middle East tumbled on Jan. 17 following the lifting of international sanctions on Iran. The markets’ fall comes amid fears of the price of oil dropping further as Iran can now sell more crude in the international market.
Every stock market in the Gulf states fell, reports Agence France-Presse. The Dubai-based DFM General Index fell 4.8 percent to 2682.56, and Abu Dhabi’s market fell by 4.5 percent.
Qatar’s indexes were down by 6.7 percent, and Oman’s stock market slid 3.2 percent in trading on Jan. 17.
Saudi Arabia’s Tadawul All Share Index fell 7 percent to 5,409.35, slumping to a five-year low.
The only positive shift in Middle East stock markets was in Iran. Iranian stocks rose by 1 percent on Jan. 17, leaving Iran’s stock market up 6 percent since the start of 2016, reports The Telegraph.
After the International Atomic Energy Agency reported Jan. 16 that Iran had complied with the nuclear program reductions of last summer’s international nuclear pact, markets across the Middle East fell sharply.
Many Gulf states depend on oil exports and stable crude prices for revenue. As a major oil producer, Iran stands to increase its crude exports and production to send oil prices even lower, reports The Wall Street Journal.
Iran seems to be confirming expectations of a larger oil supply in the international marketplace.
“The oil ministry, by ordering companies to boost production and oil terminals to be ready, kicked off today the plan to increase Iran’s crude exports by 500,000 barrels,” the Islamic Republic News Agency reported on Jan. 17, according to The Telegraph.
Saudi Arabia faces a great economic challenge with the prospect of lower oil prices and competition from a sanctions-free Iran. Saudi indexes, the largest in the Middle East, fell 20 percent in January.
“Tumbling U.S. stocks on [Jan. 15] and oil prices plumbing multi-year lows ensured the Gulf markets’ selloff [Jan. 17]. The prospect of more Iranian oil hitting the market has also now become a reality, weighing on already weak sentiment,” managing director at NBAD Securities Mohammed Ali Yasin told The Wall Street Journal.