The combination of a drop in oil prices and the spread of coronavirus is wreaking havoc on Middle East stock markets.
Saudi Arabia closed off air and sea travel to nine countries affected by the new coronavirus Monday as Mideast stock markets tumbled over fears about the widening outbreak’s effect on the global economy.
The state oil giant Saudi Aramco led the financial losses, dropping by 10% on Riyadh’s Tadawul stock exchange and forcing a halt to Aramco’s trading. Tadawul remained open, but Boursa Kuwait’s premier market shut down within 30 minutes of opening Monday as stocks again dropped by 10%, the third such emergency halt to trading in recent days.
The drop came as global oil prices suffered their worst losses since the start of the 1991 Gulf War. Other Mideast markets fell as well as the new coronavirus has affected global energy prices and OPEC failed to make a production cut deal with Russia last week.
Earlier Monday, coronavirus concerns led Saudi Arabia to cut off air and sea travel with Bahrain, Egypt, Iraq, Italy, Kuwait, Lebanon, South Korea, Syria and the United Arab Emirates. The kingdom had earlier closed off its land borders as well.
“Out of concern to protect the health of citizens and residents and ensure their safety, the kingdom’s government decided to temporarily suspend the travel,” it said in a statement attributed to an unnamed Interior Ministry official.
Abu Dhabi’s long-haul carrier Etihad, which operated 12 flights daily to Saudi Arabia, said three flights had been airborne at the time of the announcement. When those planes landed in Dammam, Jiddah and Riyadh, only Saudi citizens could disembark, with others having to return to Abu Dhabi, the airline said.
Saudi Arabia already shut down access to the holiest sites in Islam over concerns about the virus and the COVID-19 illness it causes. The virus usually leaves people with only mild to moderate symptoms, but because it’s new, experts can’t say for sure how far it will ultimately spread and how much damage it will do, both in terms of health and the global economy.
The tiny, energy-rich neighboring country of Qatar meanwhile has cut off travel to 15 nations including Bangladesh, China, Egypt, India, Iran, Iraq, Italy, Lebanon, Nepal, Pakistan, Philippines, South Korea, Sri Lanka, Syria and Thailand. That’s affected its long-haul carrier Qatar Airways, which has already been hurting from a yearslong boycott by four Arab nations including Saudi Arabia over a political dispute.
Qatar separately announced via its state-run news agency it would shut down schools and universities beginning Tuesday until further notice.
Worldwide, there are over 110,000 confirmed cases of the new coronavirus with more than 3,800 deaths attributed to it.
In the Mideast, there have been over 7,000 confirmed cases, with the vast majority in hard-hit Iran, which has seen 194 reported deaths. Experts worry Iran may be underreporting its cases.
The new virus has caused major economic disruptions, including in global aviation, which has helped slow demand for oil. An OPEC meeting with Russia last week failed to see countries agree to a production cut. In response, Saudi Arabia has warned it will increase its production and slash its own prices to claw back market share.
That sent oil prices into a free fall, losing some 25% of their value. Mideast stock markets followed suit.
The Tadawul fell over 8%, with investors particularly selling their stock in Saudi Aramco, formally known as the Saudi Arabian Oil Co. The stock closed at 27 riyals a share ($7.19), giving the company a valuation of $1.4 trillion. The company had reached $2 trillion in early days of trading in December.
The oil company offered only a sliver of its value, 1.7%, on the exchange to help fund Crown Prince Mohammed bin Salman’s redevelopment plans for the kingdom. The rest remains state owned.
The Dubai Financial Market saw stocks drop by 8.5% in a steep selloff as it opened. The Abu Dhabi Securities Exchange dropped by over 8%. The Bahrain Bourse fell by over 5%.
Meanwhile, authorities in Egypt’s southern tourist hub of Luxor announced the city would close to tourists Monday until medical experts could examine all hotel guests and cruise ship passengers in the area. Two cruise ships on the Nile River have been quarantined there in recent days, after 45 people on board one of the ships tested positive for the coronavirus. There were no immediate details on the second ship.
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Photo credit: Mecca's Grand Mosque is empty due to the virus. Amr Nabil / AP Photo