Stock markets across the United Arab Emirates ended Friday in negative territory as investors reacted cautiously to the worsening security situation in the Middle East. Rising geopolitical uncertainty overshadowed otherwise solid corporate earnings, prompting traders to reduce exposure to regional equities.
Market sentiment weakened after U.S. President Donald Trump warned that Iran and its Houthi allies could face significant military retaliation following attacks on two Saudi oil tankers in the Red Sea. The incident intensified concerns that the conflict could expand further, creating additional risks for regional trade routes and global energy supplies. According to Reuters, the growing instability has become one of the primary factors influencing Gulf financial markets.
Oil Prices Rise While Investors Remain Defensive
Crude oil continued to dominate investor attention throughout the week. Although prices eased during Friday’s trading session, they still remained on track for a weekly increase of nearly 10%, with Brent crude trading around $97.67 per barrel during European hours. Higher energy prices generally support oil-exporting economies such as the UAE, but the benefits were outweighed by fears that prolonged military escalation could disrupt economic activity and international shipping.
Dubai’s benchmark stock index slipped 0.2%, reaching its lowest level in almost seven weeks. Financial stocks were among the biggest contributors to the decline. Shares of Dubai Islamic Bank fell 1.5%, while Tecom Group, the operator of several major business districts, lost 2.1%.
One notable exception was National Central Cooling Company (Tabreed), whose stock climbed 4.4%. Investor optimism followed reports that U.S.-based infrastructure investment firm I Squared Capital had joined Saudi-backed bidders seeking to acquire district cooling assets linked to Riyadh’s King Abdullah Financial District. The development strengthened expectations that Tabreed could benefit from expanding regional infrastructure investments.
Market analysts noted that trading activity remained cautious despite relatively limited daily losses. Daniel Takieddine, co-founder and CEO of Sky Links Capital Group, said investors continue to monitor geopolitical developments closely while disruptions to maritime transportation in the region add another layer of uncertainty.
Abu Dhabi Index Shows Greater Stability
Abu Dhabi’s main stock index demonstrated more resilience but still finished 0.1% lower. The decline was largely driven by weakness in heavyweight companies. Alpha Dhabi Holding lost 0.7%, while real estate developer Aldar Properties retreated 0.5%.
The banking sector provided some support for the market. Abu Dhabi Commercial Bank (ADCB) gained 0.1% after announcing strong second-quarter financial results. The lender reported net profit of 3.38 billion dirhams ($920.33 million), representing a 31% increase compared with the same period last year, reflecting healthy lending activity and improved operating performance.
Despite Friday’s losses, market performance for the week was mixed. Dubai’s benchmark posted its third consecutive weekly decline, ending 0.5% lower overall. In contrast, Abu Dhabi’s index managed a 0.5% weekly gain, supported by stronger performances earlier in the week.
Market Outlook
Financial analysts believe regional equity markets are likely to remain highly sensitive to geopolitical developments in the coming days. While elevated oil prices continue to strengthen government revenues and support long-term economic fundamentals in the Gulf, investors are expected to remain cautious until there is greater clarity over the regional security situation. Strong corporate earnings and infrastructure investment may continue to provide selective opportunities, but volatility is likely to persist if tensions escalate further.