DUBAI, United Arab Emirates (AP) — Stock markets across the Gulf Arab region and other parts of the Middle East closed slightly lower on Thursday, an expected tumble after Saudi Arabia launched airstrikes overnight on neighboring Yemen.
Oil prices were also hit by the jitters over the escalation in Yemen, with Brent crude up $2.34 at $58.81 and U.S. crude up $2.20 at $51.41 in electronic trading.
The biggest drops in Gulf equities were in Oman and Kuwait, where markets closed around 2.5 percent lower. Markets in Bahrain, Qatar and Dubai slipped just under one percent.
Egypt's EGX 30 dropped 1.6 percent at closing Thursday, the final day of trading for the week across the region.
Saudi Arabia's stock market had lost 5 percent on Wednesday, but gained nearly a half percent by closing Thursday, alongside the bump in higher oil prices.
Investors are concerned that the Saudi-led air campaign in Yemen could lead to a broader war. Relationship Manager at Mubasher Trade, Sherif Aziz, said investors are watching to see whether there will be a ground invasion, which would likely result in major sell-offs in regional markets.
Saudi Arabia launched the airstrikes to oust Yemen's Houthi rebels who forced the country's embattled President Abed Rabbo Mansour Hadi to flee. The kingdom accuses Iran of backing the Houthis to destabilize the region. It has the backing of several regional nations, including Qatar, the United Arab Emirates, Kuwait, Bahrain, Egypt, Sudan, Jordan and Morocco.
Jamal al-Loungani, senior manager at Kuwait Petroleum Corporation, told the Kuwait News Agency that oil prices are expected to increase, but that it depends on the military operation and the security of the Bab Al-Mandeb Strait between Yemen and Djibouti, which serves as a gateway for oil tankers headed to Europe.
Capital Economics said in an analysis that while there are concerns over the impact of the crisis on the oil market and threats of disruption through the Bab al-Mandeb, the economic impact "should be limited," in part because Gulf countries "are insulated, thanks to their substantial foreign exchange reserves."
It also pointed out that Saudi oil facilities in the kingdom's east and Oman's oil fields "are a comfortable distance away" from the Yemeni border.
Associated Press video journalist Razan Alzayani contributed to this report.