Mideast stocks tumbled Sunday, in a harrowing, if predictable, rout.
Saudi Arabia, the UAE and a flurry of additional countries suspended flights from more than a half-dozen African nations, adding to an expanding list of travel restrictions that have frustrated South African officials.
Israel banned entry for all foreigners, becoming the first country to close its borders in a bid to contain the Omicron variant. The Israelis plan to redeploy counter-terrorism phone-tracking “to locate carriers of the new variant [and] curb its transmission,” Reuters said, citing Prime Minister Naftali Bennett. “Used on and off since March 2020, the surveillance technology matched virus carriers’ locations against other mobile phones nearby to determine with whom they had come into contact,” the same linked article noted. Interior Minister Ayelet Shaked said Israel’s “working hypotheses are that the variant is already in nearly every country.”
Riyadh attached a few caveats to the Kingdom’s restrictions to account for travelers who quarantined for 14 days in another country. Officials later said they’d permit travelers “from all countries” to enter provided they receive at least one dose of a vaccine inside the Kingdom.
Local shares recoiled. Exacerbating the situation was the blow to sentiment from one of the worst single-sessions in history for crude. Saudi shares dropped 4%, the most in more than a year (figure below).
Sunday’s selloff was among the steepest one-day declines since crude collapsed in early 2020 amid the onset of the pandemic and the short-lived price war between Riyadh and Moscow.
Although Saudi shares are still on pace for a banner year, the index is down more than 7% in November.
No regional benchmark was spared. Shares in Dubai were crushed.
The ~5% drop was the worst since March of 2020 (figure above).
At the risk of stating the obvious, the resumption of travel restrictions and other curbs on mobility risk undermining demand for crude, something OPEC and allied producers have repeatedly emphasized while insisting that plans to hike output should be implemented gradually.
OPEC+ has “erred on the side of caution,” Vitol’s Mike Muller said, speaking during a webinar. “Post facto, they’ve proven to be right.”
