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Investing.com -- Middle East equity markets fell only modestly in the first trading sessions after the U.S.-Israeli military offensive against Iran began Saturday, with J.P. Morgan saying limited risks have been priced in across the region.
Saudi Arabia’s benchmark Tadawul All Share Index (TASI) rose 0.6% on Tuesday, extending gains after a 0.13% increase in the previous session as of 06:48 ET (11:48 GMT).
Qatar’s QE Index closed down 0.7%, following a 4.3% slide on Monday.
In the United Arab Emirates, local bourses remained shut, while the U.S.-listed iShares MSCI UAE ETF (UAE) fell 3.5% in pre-market trade.
Meanwhile, Brent Crude Oil climbed 8.5% to $84.34 a barrel from a pre-conflict close of $72.48, after J.P. Morgan forecast an immediate move into the $80–$85 range amid mounting supply disruption concerns.
Within Saudi markets, Aramco rose 5% against its pre-war Thursday close as oil prices climbed. Al Rajhi Bank and Saudi National Bank fell 3.9% and 4.1% respectively. Elm Company was the hardest-hit tracked stock, down 11.9%, while Qatar National Bank fell 4.8%.
Positioning drove sharper declines elsewhere. Greek banks Piraeus, Alpha and Eurobank dropped 7% and 6% respectively, steeper than Saudi and Qatari peers, despite carrying no direct exposure to the conflict.
J.P. Morgan attributed the gap to crowded positioning, with Piraeus up 11% year-to-date before Monday’s session.
"Should the present value of a Greek bank’s entire future earnings drop by more than those of a Saudi or Qatari bank because of attacks on Saudi refineries or the closure of Qatar’s gas fields?" J.P. Morgan analysts said.
UAE names carry the heaviest foreign ownership. Emaar Properties stood at 52.43% foreign ownership, First Abu Dhabi Bank at 24.61%. MSCI UAE’s average foreign ownership was 23.82%, versus 11.56% for MSCI Saudi and 17.49% for MSCI Qatar, per J.P. Morgan and Bloomberg Finance L.P.
J.P. Morgan’s base case sees fighting lasting two to four weeks, with the U.S. declaring victory and halting bombing, assuming no significant ground troop deployment.
On oil supply, vessel transit through the Strait of Hormuz slowed to a near standstill March 1, the first near-complete halt in its modern history, with export flows falling to roughly 4 million barrels per day from a typical 16 mbd, per Kpler data.
Bypass pipelines in Saudi Arabia and the UAE can divert only 3.3 mbd, leaving approximately 15.8 mbd without alternative routes.
Gulf producers could sustain output for no more than 25 days under a full Hormuz disruption before mandatory production shut-ins.
Should the conflict exceed three weeks, Brent could trade in a $100-$120 range, J.P. Morgan said. Iran’s retaliation has targeted U.S. military bases and urban areas including Dubai. Oil infrastructure has so far been spared.