RIYADH | SAUDI ARABIA – Gulf stock markets fell on Tuesday and the Saudi currency dropped in the forwards market, after U.S. crude oil futures collapsed below $0 on a coronavirus – induced supply glut.
The Saudi stock index. TASI dropped 1.5% at the market open with oil company Aramco down 1.7%.
Shares in the Dubai market. DFMGI fell 1.4% while the Abu Dhabi index .ADI lost 0/5% and the Kuwaiti premier index. BKP decline 2%.
The cost of insuring a potential debit of Saudi Arabia – the world’s biggest oil exporter – increased slightly to 168 basis points from 166 on Monday, according to data from HIS Markit. It is up 13 bps in the past week.
U.S. crude oil futures fell below $0 on Monday for the first time in history as demand cratered. Brent crude, the international benchmark, also slumped, though that contract was nowhere near as weak.
Lower oil prices, combined with other economic pressures caused by the coronavirus outbreak, are hurting the budgets of Gulf countries that rely heavily on crude exports and have strained their currencies.
The Saudi riyal fell in the forwards against the dollar. It is pegged at 3,75 to the U.S. currency in the spot market, so banks often use the forwards market to hedge against risks.
Nine-month dollar/riyal forwards SAR9M = – trades scheduled to take place in nine months – were at 120 points, up from Friday’s close of 60 points – their highest level since November 2017, Refinitiv data showed.
One-year dollar/riyal forwards SAR1Y = rose to 210 points, flirting with a near 2-1/2 year high of 211 hit on Monday.