The Impact of Oil Price Changes on Stock Markets and Firms’ Financial Performance: Evidence from Saudi Arabia and the UAE

Abstract

This study looks at how oil price changes affect stock markets in the Gulf and the financial performance of Saudi firms. Oil still plays a major role in these economies, and shifts in global prices often appear quickly in local markets. The research focuses on the Tadawul All Share Index (TASI) in Saudi Arabia, the Abu Dhabi Securities Exchange (ADX) in the UAE, and company outcomes measured through Return on Assets (ROA). The aim is to see how far oil price swings matter for daily market returns and firm-level results, and whether the impact is stronger in oil-related industries than in more diversified ones. The dataset covers 2009–2024. It includes daily returns for TASI and ADX, which are matched against Brent oil prices, while firm-level regressions test the effect on profitability. The analysis applies Ordinary Least Squares (OLS) and panel regressions with both fixed and random effects. Outliers are reduced through winsorisation, and industry dummies are used to capture sector differences. The findings show that TASI is more responsive to oil price changes than ADX. At the company level, firms linked closely to oil are more sensitive, while diversified firms are less affected. GDP growth has only a smaller role. Overall, the evidence highlights the ongoing reliance of Gulf markets on oil and underlines the importance of economic diversification.