Stock markets across the Middle East plunged on Monday in what analysts have dubbed a “regional bloodbath,” as a double shock of aggressive new US tariffs and a dramatic collapse in oil prices rocked investor confidence. ‘

Energy-reliant Gulf economies bore the brunt of the rout, which mirrored a wider global sell-off, threatening fiscal stability and key diversification agendas.

The Dubai Financial Market (DFM) opened with a staggering six per cent decline, while the Abu Dhabi Securities Exchange (ADX) fell four per cent.

However, both exchanges managed to trim their losses by the end of the trading session, closing down 3.08 and 2.59 per cent respectively.

Heavyweights such as Emaar Properties, Dubai Islamic Bank, and Emaar Development led the DFM’s early losses, shedding between 7.5 and 9 per cent in the first 15 minutes.

The ADX was similarly battered, with Adnoc Gas down 4.9 per cent, First Abu Dhabi Bank (FAB) off 2.83 per cent, and Multiply Group declining 6.17 per cent.

“Tariffs are dimming trade optimism, and oil’s collapse is hurting GCC economies very hard,” said James Mathew, CEO of UHY James. “Oil below $65 and tariffs this aggressive could push GCC growth forecasts into negative territory.”

Oil, the economic lifeblood of the region, has suffered a brutal hit. Brent crude has tumbled nearly 15 per cent over the past week, settling slightly above $63 per barrel — a 30 per cent drop from last year’s average and well below the break-even thresholds for Gulf producers such as Saudi Arabia.

In a surprising twist, Saudi Arabia’s Tadawul All Share Index (TASI) emerged as the only Gulf market to post gains, climbing 1.05 per cent to 11,194.02.

Trading volume surged to SR10.5 billion ($2.8 billion), with 150 stocks advancing. National Co. for Learning and Education led gains with an 8.84 per cent surge.

However, the rebound came after two days of steep losses, and sectoral pain remains widespread. Since the US tariff announcement on April 2, capital goods in Saudi Arabia have plummeted 15 per cent, while insurance and pharmaceuticals are down 14 per cent.

Even blue-chip giant Saudi Aramco saw its valuation slide by billions as its stock dropped over five per cent across Sunday and Monday.

New US tariffs imposed on GCC nations range from 10 per cent on countries like the UAE and Saudi Arabia to 39 and 41 per cent on Iraq and Syria respectively. Economists warn of ripple effects on inflation, trade flows, and investment sentiment.

Adding to the instability, Opec+ recently announced a surprise acceleration in oil production, further straining prices.

“This is a dangerous time for oil markets,” said Emirates NBD in a statement, noting that the shift to monthly output targets could inject even more volatility.

Despite recent turmoil, the UAE has enjoyed strong foreign inflows since 2022, buoyed by a wave of IPOs and growing retail participation. February saw $2.47 billion in GCC equity inflows, according to Iridium Advisors.

Still, analysts caution that the regional outlook hangs in the balance. “Markets are running on fear,” said Vijay Valecha, CIO of Century Financial. “Without a policy pivot, we could be in for further declines.