The Saudi stock market reached its lowest level during the war between the United States, Israel, and Iran at the end of Tuesday's trading session on October 17, 2023. This market decline occurred due to the decrease in the stock price of Saudi Aramco. While oil markets are reacting to signs of improved crude oil exports through and around the Strait of Hormuz, this situation reflects economic challenges for Saudi Arabia.
Significant Decline in Stock Index
On this day, the overall stock index of Saudi Arabia (Tadawul All-Share Index) faced a decline of 1.17%, reaching a total drop of 5.6% over the past six months. The stock of Aramco, which has a market value of about $1.6 trillion, decreased by 1.4% to 25.18 riyals ($6.70). This figure represents the lowest stock price of Aramco in over six months and the lowest since the start of the war on February 28, 2023.
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Background of Oil Price Fluctuations
The stock price of Aramco had fallen below 25 riyals before the onset of these conflicts, but following the rise in oil prices, the stock increased. Brent oil prices reached about $120 per barrel in late April, and Aramco's stock hit its highest level at 27.96 riyals in May. However, after the reduction of tensions and the drop in oil prices below $80 in June and August, the value of Aramco's stock gradually declined.
Impact of War on Saudi Economic Security
The impacts of the war on Saudi Arabia's economic security are clearly evident. Drone attacks in September suspended the country's East-West pipeline for nearly two weeks, and after operations resumed, Saudi Arabia diverted some of its crude oil towards the Strait of Hormuz. These developments have not only affected the stock market but have also heightened concerns about energy security and oil supply.
While global oil markets are slowly recovering, price volatility and uncertainty in the region are putting additional pressure on the Saudi stock market. Analysts believe that the current situation may be particularly concerning for both domestic and foreign investors, highlighting the need for new economic and political measures.
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