Escalating geopolitical instability in the Middle East is shaking global financial markets, pushing oil and gold prices to multi-month highs. The rising tensions are causing urgent questions about the near-term outlook for regional stocks and the overall economic impact on the United Arab Emirates.
Josh Gilbert, Market Analyst at eToro, commented that markets do not handle uncertainty well. He noted that investors are facing one of the most unpredictable geopolitical situations in recent years. Gilbert stated that the main concern for the market is not just the events happening, but how long the disruption will last and whether things will get worse or better in the coming days.
In a rare move that shows how serious the situation is, the Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM) stayed closed on Monday and Tuesday. This trading halt, outside of regular holidays, has left investors anxious about how the markets will react once trading resumes.
Gilbert mentioned that past outcomes for such closures can differ. He pointed out that when Turkey halted trading after the 2023 earthquake, markets rallied when they reopened. On the other hand, when Russia stopped trading after invading Ukraine, the results were much worse. He stressed that the next 48 to 72 hours will be crucial for UAE markets.
Commodities and Energy Supply
Energy markets have felt the most immediate effects. Brent crude prices rose by about 13%, reaching approximately US$82 per barrel. This increase mainly comes from worries about potential supply issues in the Strait of Hormuz, a key maritime route that processes nearly 20% of the world’s crude oil and liquefied natural gas (LNG).
Gilbert explained that even if the Strait is not completely closed, any disruption to tanker traffic is enough to disturb energy markets. He added that conflicting messages from regional players have made it harder for investors to gauge risk.
Despite the instability, some short-term buffers are in place. The global oil market entered this situation with a relative oversupply. Moreover, OPEC+ has already revealed plans to increase production by 206,000 barrels per day starting this April. Major economies like the United States and China also hold substantial strategic reserves, and Saudi Arabia has pipeline capacity to reroute some exports if necessary. However, Gilbert warned that if tensions continue, persistently high oil prices will eventually raise global transport costs and inflation.
Safe Havens and Risk Assets
Gold has confirmed its role as a top safe-haven asset. Prices climbed above US$5,350 per ounce, reflecting a year-to-date increase of about 22%. Gilbert noted that gold remains the go-to asset for investors during geopolitical turmoil, and demand is likely to stay strong unless a significant easing occurs.
In contrast, high-risk assets such as cryptocurrencies have come under pressure. Gilbert mentioned that in “risk-off” situations, investment typically moves away from volatile assets and toward more traditional safe havens.
Impact on the UAE Economy
For the UAE, the effects of the conflict go beyond the stock market. Important economic sectors like real estate, tourism, aviation, and retail are particularly vulnerable to regional instability.
The Dubai real estate market, which recorded an average of 13,000 home sales per month last year at an average price of AED 2.5 million, relies heavily on foreign investment and expatriate money. With around 350,000 new units projected to be available in the next two years, any ongoing loss of investor confidence could impact the market’s ability to manage this new supply.
Tourism is also feeling the strain. The sector made up about 13% of the UAE’s GDP in 2025. Reports of flight cancellations and temporary airport disruptions are already affecting the industry. Gilbert said that Dubai’s retail and hospitality sectors depend on international connections, and lasting airspace issues will affect short-term growth.
Although higher oil prices might offer some fiscal support to the government, Gilbert pointed out that the UAE economy is now more varied and service-oriented than it has been in past decades. This change means that disruptions to tourism and aviation weigh more heavily than before.
Long Term Outlook
Gilbert warned investors not to react impulsively during this period of volatility. He suggested that for most long-term investors, staying the course is usually the better option, as selling during panic seldom pays off in the long run.
He concluded that while UAE markets might see some instability when they reopen, especially since little geopolitical risk had been previously considered, the long-term fundamentals are strong. The country’s solid infrastructure, business-friendly regulations, and status as a regional hub have taken decades to build and are unlikely to be undone by short-term issues.
READ MORE: UAE Economy Poised For 4.8% Growth In 2025
