Middle East stock markets crash as tariffs and low oil prices strike hard
- Middle East stock markets have been severely affected by the recent U.S. tariffs and declining oil prices.
- Countries like Saudi Arabia and the UAE have seen substantial losses in their stock exchanges, including state-owned companies.
- The region's economic stability is threatened, leading to urgent discussions about trade negotiations with the United States.
In early April 2025, Middle Eastern stock markets faced significant declines amidst pressures from U.S. tariffs and a drop in oil prices. The region's energy-producing nations, heavily dependent on oil revenue for government spending, are particularly affected. Stock exchanges across the Gulf Cooperation Council states saw substantial losses; for instance, the Dubai Financial Market fell by 6% and the Abu Dhabi Securities Exchange by 4%. This turmoil extended to Saudi Arabia, where the Tadawul stock exchange dropped more than 6%, further deepened by losses in the state-owned oil giant Aramco. The decline in oil prices, which have plummeted nearly 30% compared to the previous year, directly correlates with the new tariff measures imposed by the U.S. These tariffs not only target Gulf nations but also affect countries like Iraq and Syria with even steeper rates of 39% and 41%, respectively. As international trade faces instability due to these tariffs, many analysts are raising concerns about the long-term implications for regional economies. Adding to the discussion, former economic adviser to President Trump, Stephen Moore, expressed worries that declining oil prices could signal reduced demand, indicating a potential economic downturn rather than a positive outcome. While President Trump touted the drop in energy prices as beneficial, his former adviser cautioned that such a decline could reflect negative market sentiment about future growth. This situation has prompted fears of broader impacts on trade and economic stability, prompting some nations, including Pakistan, to strategize negotiations with the U.S. to alleviate pressures stemming from these tariffs. To exemplify the pervasive economic anxiety, the Pakistan Stock Exchange witnessed a rapid decline in early trading hours following news of the tariffs. The KSE-30 index suffered a 5% drop, leading to a suspension of trading for an hour. Pakistan’s Finance Minister indicated that a delegation would be sent to negotiate with U.S. officials, highlighting the urgent need to address these economic challenges. The ramifications of the new tariff policies are widespread, underscoring the interconnectedness of global markets and the immediate need for countries to adapt to evolving trade conditions. As a result, market participants in the region are bracing for continued volatility as they grapple with uncertainties tied to international trade dynamics. Economic experts emphasize the need for regional nations to reassess their dependence on oil revenues and seek diversified strategies to foster resilience against external shocks.