Hormuz and Bab al-Mandab Continue to Pressure Markets
Gulf markets were affected globally by oil supply risks through the Strait of Hormuz and Bab al-Mandab, with divergent performance in the Kuwait Stock Exchange and rising oil prices.
Translated by Qiyas from النهار — Original source
Gulf and global financial markets entered a new session under the influence of a dual dynamic combining rising oil supply risks and ongoing diplomatic efforts to contain US-Iran tensions, while trade and energy corridors, notably the Strait of Hormuz and the Bab al-Mandab, remained at the forefront of investors’ calculations. In Kuwait, major indices of the Kuwait Stock Exchange showed mixed performance at the close, despite gains in seven sectors. The First Market Index fell 0.67%, the General Index dropped 0.53%, and the Main 50 Index declined by approximately 0.64%, while the Main Market Index rose 0.13%.
Globally, oil prices remained near elevated levels, with concerns persisting about crude flows from the Gulf region, despite the return of some Saudi supplies via alternative land and sea routes. According to the latest market trades, Brent crude hovered around $105 per barrel, while West Texas Intermediate (WTI) traded near $92, as geopolitical risk premiums continued to support prices.
Recent data indicate that exports from major Middle Eastern producers rose to approximately 12.8 million barrels per day in September, supported by increased shipments from Saudi Arabia and the United Arab Emirates. However, part of these flows relies on alternative routes that are more costly and less efficient.
The Strait of Hormuz remains the focal point of the oil equation; improved movement of some tankers does not signify a return of navigation to normal levels. Risks do not end at Hormuz, as Bab al-Mandab remains another pressure point on trade and energy flows between the Gulf, the Red Sea, and the Suez Canal.
Security concerns are prompting some oil tankers and commercial vessels to avoid the strait or opt for longer routes, which is reflected in increased voyage times, higher fuel and insurance costs, and elevated freight rates. In a notable paradox, gold faced strong pressure despite ongoing geopolitical tensions, with the precious metal falling to around $4,125 per ounce in the latest trades, after experiencing its largest single-day drop in over three months.
