UAE Markets Slide as Israel-Iran Conflict Escalates
Markets across the United Arab Emirates (UAE) plunged in early Friday trading following Israel’s widescale military strikes on Iran, a move that significantly escalated tensions in the already volatile Middle East region.
Israeli officials confirmed that the strikes targeted Iranian nuclear facilities, ballistic missile production sites, and key military commanders. According to Israel, this is the beginning of a long-term campaign aimed at preventing Tehran from developing nuclear weapons.
Dubai, Abu Dhabi Indexes Drop on Geopolitical Fears
The Dubai Financial Market General Index (DFMGI) fell 5.1% in early trade, while the Abu Dhabi Securities Exchange (ADX) opened 3.5% lower. Although both markets recovered some ground as the session progressed, they remained in negative territory — down 2.5% and 1.8% respectively by 0640 GMT.
The sharp losses reflect growing investor unease amid regional instability, with many now bracing for further volatility across Gulf financial markets.
Air Arabia Plunges 7.6% as Airlines Reroute Flights
Aviation stocks, particularly those with regional exposure, saw some of the biggest losses. Air Arabia shares dropped 7.6% after international airlines scrambled to divert or cancel flights over Israel, Iran, Iraq, and Jordan due to heightened risk in the airspace.
The sudden rerouting is expected to increase fuel costs, create logistical delays, and impact passenger traffic, adding pressure to the already strained airline industry.
Oil Prices Jump Over 6%, Hitting 5-Month Highs
Global oil markets reacted sharply to the news, with Brent crude and US West Texas Intermediate (WTI) both surging more than 6%. The gains represent the largest single-day increase in crude futures since 2022, pushing prices to their highest levels in nearly five months.
With Iran being a major oil exporter and Strait of Hormuz shipping lanes at risk, the market is pricing in a significant geopolitical premium, fearing potential supply disruptions.
Gold Rallies as Investors Seek Safe Havens
As is typical during times of geopolitical stress, gold prices rose sharply, climbing to two-month highs. The metal’s status as a safe-haven asset has drawn increased interest from global investors seeking stability amid heightened risk and market uncertainty.
“Investors are clearly hedging against prolonged conflict in the Gulf, which could have significant global repercussions,” said a regional analyst at Emirates Investment Authority.
Market Outlook: Volatility Likely to Continue
With Israel signaling more military action and Iran expected to respond, markets in the Gulf and beyond are likely to remain volatile. Sectors such as energy, logistics, tourism, and finance could face headwinds in the short term.
Regional fund managers may now pivot to lower-risk assets, while international investors may temporarily reduce exposure to Middle East equities until clarity emerges.
