Most Gulf stock markets fell on Tuesday as the diplomatic crisis surrounding Qatar worried investors.
Qatar’s index fell 1.6 percent to 9,059 points, its lowest close since January 2016, in heavy trade. It had plunged 7.3 percent on Monday after worrying developments.
The Qatari market rebounded more than 3 percent in early trade on Tuesday, buoyed by hopes that a Kuwaiti mediation effort might succeed. Some fund managers also said they expected Qatari state-linked funds to support the market.
But the rebound was short-lived. In contrast to Monday, when selling of stocks was indiscriminate, many of the biggest losers on Tuesday were related to Qatar’s foreign trade, which could decline or face higher costs due to the sanctions.
Logistics company Gulf Warehousing sank 8 percent and Qatari German Medical Devices, which has done considerable business in Saudi Arabia, tumbled 8.8 percent.
The biggest lender, Qatar National Bank, slipped 1.3 percent. Although Qatar’s huge financial reserves mean it can probably avoid a crippling crisis, many parts of its economy, from tourism to banks, which obtain funding from elsewhere in the Gulf, may be hit.
Most other Gulf bourses dropped moderately. Although Gulf economies have little exposure to Qatar, foreign portfolio investors may at least temporarily become more cautious toward the whole region.
Meanwhile, oil prices slipped further below $50 a barrel on Tuesday on concerns that exporters’ effort to tighten the market could be coming under pressure from the diplomatic rift and from sustained high inventories in the US.
Surplus oil in many parts of the world and developments with Qatar had traders nervous, even after Kuwait Oil Minister Essam Al-Marzouq said Qatar remained committed to restricting crude output under an agreement between the Organization of Oil Exporting Countries (OPEC) and several non-OPEC suppliers.
“Production growth outside of the areas that have agreed to cut, is still the dominant theme in the market,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
Greg McKenna, chief market strategist at futures brokerage AxiTrader, said he believed there was “a real chance” OPEC solidarity surrounding production cuts might fracture.
Benchmark Brent crude oil was down 29 cents a barrel at $49.18 by 1518 GMT, down around 8 percent from its level before OPEC and its non-OPEC allies said they were extending cuts until March 2018.
The initial six-month deal to curb output had been due to run till the end of this month. US light crude was down 18 cents at $47.22.
Qatar produces about 620,000 barrels of crude per day (bpd).

Source: Arab News