DUBAI, March 9 — Stock markets in the energy-rich Gulf states were battered today as oil prices crashed amid a price war after crude producers failed to reach a deal on output.
All the seven Gulf Arab markets were in the red for the second day in a row, with the Saudi Tadawul bourse sliding by 9.4 per cent at start before recovering some of the losses.
The Saudi market was trading down 6.1 per cent at mid-session with the energy giant Saudi Aramco sliding 6.8 per cent after slumping 10 per cent at the start.
In the past two days, some US$270 billion were shaved off the capital value of the largest listed firm in the world. Its capitalisation stands at US$1.49 trillion, way below the US$2 trillion sought by the kingdom.
Kuwait’s Premier index tumbled 10.3 per cent and trading was suspended for the second day in a row, while the All-Shares Index lost 8.6 per cent.
Dubai Financial Market dropped 8.3 per cent at close, its worst level in seven years but authorities suspended trading in most leading stocks after slumping the maximum daily limit of 10 per cent.
Abu Dhabi Securities Exchange shed 8.1 per cent to a four-year low, while the Qatar Stock Exchange was down 9.7 per cent.
The tiny bourses of Oman and Bahrain dipped 5.6 per cent and 5.8 per cent, respectively.
The seven bourses took a first beating Sunday, the first trading day of the week, shedding tens of billions of dollars from their values, with Saudi Arabia tumbling by 8.3 per cent.
Oil prices are so sensitive for the six-nation Gulf Cooperation Council (GCC) alliance as they generate between 70 per cent and 90 per cent of public revenues.
The crash in oil prices comes at a time when all the six nations — Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates — have been struggling to meet persistent budget deficit as they resort to austerity measures.
Coronavirus impact
Oil prices crashed at the opening today with the benchmark Brent crude diving to US$36 a barrel.
The crash in oil added to the panic that the ongoing price war may continue for a long time.
“The message they (the Saudis) are podcasting: as long as it takes,” Anas al-Hajji, a Texas-based oil expert said about the duration that oil price may continue.
“But given the sharp price decline... it is hoped they will start cooperating again in May... but most likely it will happen in July,” when Opec meetings are scheduled, Hajji told AFP.
As the deadly coronavirus disease claims more lives around the world, dealers are fleeing out of riskier assets and into safe havens, sending gold and the yen surging and pushing US Treasury yields to new record lows.
Saudi Arabia launched an all-out oil war yesterday with the biggest cut in its prices in the past 20 years, Bloomberg News reported, after Opec and its allies failed to clinch a deal to reduce output.
The Saudis “are responding to Russia’s exit from output cuts by launching a price war,” Bill Farren-Price, director of Britain-based R S Energy, told AFP.
A meeting of main producers was expected to agree to deeper cuts to counter the impact of the coronavirus — but Moscow refused to tighten supply.
In response, Riyadh slashed its price for April delivery by US$4-$6 a barrel to Asia and US$7 to the United States. It also cut its crude prices to Europe where Russia exports the most.
Russia’s decision not to comply had already battered prices and there are warnings they could continue to drive lower towards US$20 if the two sides do not reach an agreement. — AFP
