Oil Drop may Weigh on Markets; Saudi Traders Eye Budget

Middle East stock markets may slip on Sunday following a renewed drop in oil prices after OPEC opted to maintain production at near record highs.

Brent crude dropped 2 percent on Friday to $43 per barrel after an OPEC policy meeting in Vienna failed to agree on a new production quota, allowing member countries to continue pumping more than 31 million barrels per day of oil, further swelling a global glut that has depressed oil prices for over a year.

"Oil prices are near the lows that were tested in the summer and any break below these levels will trigger negative sentiment and ignite a new wave of selling (of Saudi Arabia stocks)," said Mohammad al-Shammasi, chief investment officer at Riyadh-based Derayah Financial.

The Saudi market has been trading sideways for sometime as investors await more clarity on macroeconomic policy, added Shammasi, particularly Saudi's budget for 2016 which is due to be announced in December.

Riyadh's stock index declined 1.1 percent to 7,268 points on Thursday; all sectors were lower except for retail after Al Tayyar Travel surged 9.6 percent in a second day of heavy trade.

(Reporting by Celine Aswad; Editing by Matt Smith)