Saudi Arabian markets dropped sharply in early trade on Sunday after attacks on the kingdom’s two key oil plants on Saturday halted more than half of Saudi output.
Other major Gulf markets also traded down.
Attacks were claimed by the Iran-aligned Houthi group, however U.S. Secretary of State Mike Pompeo accused Iran of leading the attacks and ruled out Yemeni involvement.
The attack knocked out more than half the kingdom’s output and over 5 percent of global oil supply, in a move expected to send oil prices soaring and increase tensions in the Middle East.
Saudi’s index was down 2.1 percent. Al Rajhi Bank shed 2.7 percent, and petrochemical maker Saudi Basic Industries (SABIC) retreated 3.5 percent.
SABIC and other petrochemical firms Yanbu National Petrochemicals (down 4.7 percent), Saudi Kayan Petrochemical (down 3.5 percent) and National Petrochemical (down 3.7 percent) all said after attacks that their feedstock supplies would be affected.
With Sunday’s fall, the index has wiped out all its gains this year and was trading around 2 percent lower. It jumped as much as 20 percent at its peak in May, led by foreign investors who have been net buyers on the entry of Saudi stocks into the MSCI and FTSE Russell emerging market indexes.
However, the market began to trend down since May as some Saudi stocks turned overvalued, with the kingdom’s slowing economy hovering on the edge of contraction, prompting investors to pull most shares down from lofty valuations.
Dubai’s index fell 0.8 percent weighed down by property shares with blue-chip developer Emaar Properties losing 1.6 percent.
Abu Dhabi index traded 0.5 percent lower with First Abu Dhabi Bank and Emirates Telecom both shedding 0.5 percent.
Kuwait’s index dropped 1.1 percent led by 2.8 percent fall in lender Kuwait Finance House
The Qatar index was also down 0.4 percent with financials acting as the biggest drag and the Gulf’s biggest lender Qatar National Bank losing 1.2 percent.