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UAE, Saudi markets tumble as Iran nuclear accord takes effect

UAE, Saudi markets tumble as Iran nuclear accord takes effect

Iran is expected to raise oil supply in the market, which in turn is slated to further dampen prices

Stock markets in Saudi Arabia and the United Arab Emirates dropped on Sunday as the nuclear accord signed between Iran and the six world powers came into effect on Saturday.

Under the deal, Iran will be able to export oil to international markets, a move which is expected to further weigh on already low oil prices.

Saudi Arabia’s Tadawul All Share Index plunged 7.08 per cent on Sunday to reach its lowest level since March 2011. Industrial investment was the worst performing sector, posting a drop of 9.89 per cent, followed closely by media and publishing (down 9.86 per cent) and real estate development (down 9.36 per cent).

Meanwhile the Dubai Financial Market General Index also lost 4.64 per cent, after reaching a low of 5.2 per cent – its biggest loss in five months. GGICO was the biggest loser, down 9.95 per cent while SHUAA also lost 9.87 per cent.

The Abu Dhabi Securities Exchange was also down 4.24 per cent on Sunday, with the energy sector posting the biggest loss at 7.65 per cent.

Iran, which houses 10 per cent of the world’s oil supplies, is expected to raise its output even as oversupply in the market continues to dampen prices.

Iran’s state news agency IRNA quoted its representative to the Organisation of Petroleum Exporting Countries Mehdi Asali as saying on Saturday: “We have not moderated our plans regarding increasing output when sanctions are lifted. It will be increased by 500,000 bpd (barrels per day), and by another 500,000 bpd shortly after that.”

He added that Iran had no intention of entering an oil price war with rival producers.

Oil prices reached a 12-year low to close below $30 on Friday after falling by more than 30 per cent in 2015 and 20 per cent so far this year.

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