Oil Price Plunge May Weigh on Gulf Markets

Renewed declines in oil prices could weigh on Middle East stock markets on Sunday.

Oil made its biggest weekly loss in eight months last week and U.S. Light Crude fell 5.1 percent on Thursday and Friday alone, after Middle East bourses last traded.

Brent crude is within $2 of a new 6-1/2-year low and the sustained slump in oil prices has hurt state finances in the Gulf along with earnings in the important petrochemical sector.

Global stock markets also retreated on Friday and U.S. stock futures fell post-close after Paris was struck by multiple deadly attacks, with analysts forecasting major international bourses would suffer a short-lived sell-off when trading resumes on Monday.

With these factors in mind, Middle East investors are likely to be reluctant to commit new cash to the markets on Sunday, although MSCI's announcement that it will add two regional stocks to its global emerging markets index could bolster sentiment a little.

MSCI will include Abu Dhabi-listed Etisalat and Qatar Gas Transport Co (Nakilat) to the index at November-end, the index compiler announced over the weekend.

Shares in Etisalat, the Gulf's largest telecommunications operator by market value, have gained 29 percent since the former monopoly in June said it would allow foreigners and institutions to own its shares. The reform, introduced on Sept. 15, was a prerequisite for the company to join MSCI's emerging market index.

Nakilat shares have rallied 27 percent since mid-August's 2015 low and so - like Etisalat - may face some selling pressure as investors book recent gains.

MSCI also said it would delete Qatari drilling rig provider Gulf International Services from the emerging markets index, while adding Bahrain's Ahli United Bank to its frontier markets index.

(Reporting by Matt Smith; Editing by Andrew Torchia)