Dubai: The Abu Dhabi bourse’s main index closed 1.71 per cent higher on Monday as oil prices spiked after attacks on facilities in Saudi Arabia wiped millions of barrels of oil off the market.
Brent crude prices climbed 20 per cent at the open, the biggest percentage jump since Iraq’s invasion of Kuwait in 1990. Brent gave up some of these gains hours later, trading around the $65-mark, or nearly 9 per cent higher. Both the UAE’s main stocks indices gained.
The Abu Dhabi Securities Exchange (ADX) general index closed at 5,160.73, while the Dubai Financial Market (DFM) index inched up 0.29 per cent to 2,878.04. Most of the powerhouses in Abu Dhabi rose, with First Abu Dhabi Bank up 2 per cent, Abu Dhabi Commercial Bank up 2.92 per cent, and Etisalat rising 2.56 per cent.
In Dubai, blue chips such as Emaar, Dubai Islamic Bank, and Emirates NBD moved by less than 1 per cent.
The drone attacks on Saudi oil facilities over the weekend caused panic among investors as they affected 5.7 million barrels of oil per day, or nearly 5 per cent of the world’s oil supply. They also saw the Tadawul index in Saudi Arabia fall by around 3 per cent at the open on Sunday, before ending 1 per cent lower. The Tadawul closed 1 per cent higher on Monday.
Charles-Henry Monchau, managing director of investment management at Al Mal Capital, said the attacks present “an enormous upside risk” to oil prices as production temporarily shuts down while repair works are carried.
“When it comes to the consequences of higher oil prices on GCC equity markets, the correlation is lower than it used to be,” he told Gulf News via email.
“Sustained higher oil prices can have positive consequences on fiscal spending but the positive effects can be offset by lower business sentiment if the rise of oil prices is accompanied by rising geopolitical risks in the region.”