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The Saudi stock exchange plunged nearly 6 percent in intraday trading on the first day of the Iran war before Aramco caught the fall. Then it did something no other Gulf bourse managed: it recovered. By the Eid al-Fitr suspension on March 16, the Tadawul All Share Index had clawed back to within half a percent of its pre-war close. Dubai, by contrast, is down 17 percent and hasn’t moved.
The numbers don’t make sense until you understand the one stock holding the entire index together. Saudi Aramco, which accounts for roughly 12 to 16 percent of the TASI’s weighting, rose 3.4 percent on the first day of the war, per Tadawul data. Brent crude was surging from $70 toward $80 and every dollar higher flowed straight into Aramco’s revenue line. While foreign funds were selling everything in the Gulf, Aramco was doing what it always does during an oil shock: getting more expensive.
What the First Week Looked Like
On February 25, the last trading session before the strikes, the TASI closed at 10,847.93. On March 1, the first session after the war began, the index plunged as much as 5.8 percent intraday to 10,214, its lowest level since March 2023, per Trading Economics. It closed the day at approximately 10,475, a 2.2 percent decline that Bloomberg described as the biggest single-session loss since April 2025. Net foreign selling exceeded $8 billion during the first two weeks, per Saudi Exchange data, as international funds scrambled to exit Gulf exposure. Boursa Kuwait suspended trading entirely as a precautionary measure. Abu Dhabi’s exchange triggered emergency circuit breakers. Qatar’s bourse faced projections, later quantified by Goldman Sachs, of a potential 14 percent GDP contraction if the Strait of Hormuz remained contested through April.
Put that in context. The Tadawul took a real hit on day one. It just had a shock absorber that nobody else in the Gulf did.
The recovery was driven almost entirely by domestic buyers. Saudi institutional and retail investors, who had been rotating capital out of international markets and back into the home exchange throughout early 2026, stepped in and bought the dip aggressively. Bloomberg reported on March 13 that the Tadawul was up 1.7 percent from its pre-war close, making it the only Gulf index in positive territory. By the last session before the Eid suspension on March 16, the TASI sat at 10,886.63, essentially flat against its February 25 close. Aramco’s dividend, a base payout of $19.5 billion annually ($0.3105 per share per quarter), gave income-focused investors a reason not to sell even as missiles were landing in Riyadh.
Why Saudi Arabia Isn’t Qatar
The structural difference between the Tadawul and every other Gulf exchange comes down to one piece of infrastructure that nobody paid much attention to before February 28: the East-West Pipeline. Saudi Arabia’s Petroline runs from the Eastern Province to Yanbu on the Red Sea coast, with a capacity of approximately 5 million barrels per day. That pipeline bypasses the Strait of Hormuz entirely. When Iran struck Ras Laffan and knocked out 17 percent of Qatar’s LNG capacity for three to five years, Qatar had no alternative export route. Its entire economic model transits through a waterway that Iran controls.
Saudi Arabia can reroute. Not all of its output, but enough. The UAE’s Abu Dhabi Crude Oil Pipeline adds another 1.5 million barrels per day of non-Hormuz capacity. Together, these two pipelines mean that even with the Strait effectively closed, roughly 6.5 million barrels per day of Gulf crude can still reach global markets. That’s not enough to replace the full 20 percent of global supply that normally transits Hormuz, but it’s enough to give Aramco pricing power and, more to the point, to give the Tadawul a floor that Dubai and Doha don’t have.
Phillip Nova senior analyst Priyanka Sachdeva captured the market’s read: “Markets are acknowledging the seriousness of the conflict, but are also signalling that, for now, this is a geopolitical shock, not a systemic crisis.” For Saudi Arabia specifically, the war is paradoxically improving the terms of trade even as it threatens the physical security of the kingdom. Aramco’s revenue goes up with oil. The TASI goes up with Aramco. The arithmetic works until a missile hits something that can’t be rerouted.
The Defence Dividend
There’s a second, less obvious factor supporting the Tadawul: defence spending. The World Defense Show 2026, held in Riyadh in February, produced 60 defence deals worth approximately SAR 33 billion ($8.8 billion), according to Saudi Exchange records. The event drew 1,486 exhibitors from 89 countries. Saudi Arabian Military Industries, the PIF subsidiary that anchors the kingdom’s defence localisation strategy, isn’t publicly listed, but the companies that supply it are. Materials and industrials firms on the Tadawul have seen order books swell as the war reshapes procurement priorities across the Gulf.
The SAMI Land Industrial Complex in Riyadh, covering 82,000 square metres with annual capacity for 1,500 military vehicles, began operations in early 2026. That facility’s output is now more urgently needed than its designers anticipated when they broke ground.
What Dubai’s Collapse Tells You
The Dubai Financial Market’s 17 percent decline is the mirror image of Riyadh’s resilience. Dubai doesn’t produce oil. Its economy runs on tourism, real estate, logistics, and aviation, all of which are being hit simultaneously. Emirates Airlines has grounded thousands of flights due to airspace closures. British Airways cancelled all Doha flights through April 30. The UAE’s Habshan gas facilities were shut after debris from an intercepted strike caused damage. An Iranian projectile landed near Australia’s military headquarters in the Emirates, per Prime Minister Albanese.
For Dubai, there’s no Aramco to catch the index. There’s no East-West Pipeline to bypass the strait. The emirate’s model was built on being the neutral, safe, connected hub of the Gulf. Three weeks of Iranian missiles have put a very large question mark next to all three of those adjectives. The DFM index is pricing in the possibility that the “safe haven of the Middle East” narrative, which underpinned a decade of real estate and tourism investment, may need to be fundamentally re-evaluated.
What the Market Is Telling You
The Tadawul reopens after Eid with Brent above $110, Aramco shares up approximately 13.7 percent year-to-date at SAR 27.10 per House of Saud data, and the kingdom’s defence industrial base accelerating. Aramco’s full-year 2025 net profit came in at SAR 348 billion. Q1 2026, with oil averaging well above $90, will be dramatically stronger. The TASI is the only Gulf exchange where international institutional investors are still deploying capital rather than purely withdrawing it, per Bloomberg.
That doesn’t mean it’s safe. Saudi air defences intercepted four ballistic missiles aimed at Riyadh and two at the Eastern Province on Wednesday alone. The Samref refinery has been hit. “Trust is gone,” a senior Riyadh official told reporters after Qatar’s Ras Laffan was struck. The question for the Tadawul isn’t whether the kingdom’s fundamentals are stronger than its neighbours’. They are, and obviously so. The question is whether a market that recovered from a 6 percent intraday shock in two weeks can absorb the next escalation, because in this war, each escalation has been larger than the last. The market is betting yes. It’s the only bet available in the Gulf right now.
For a complete timeline of how the Iran war reshaped global markets, see our reference page.
