Saudi Arabia’s benchmark stock index edged higher on Sunday, May 31, while Qatar’s main bourse slipped, as investors across the Gulf weighed the fragile state of negotiations between the United States and Iran over a ceasefire extension that had yet to receive formal approval from President Donald Trump.
The Saudi Tadawul All-Share Index (TASI) posted modest gains at the week’s open, lifted by banking stocks. Qatar’s benchmark index fell, dragged lower by uncertainty over Doha’s central role in the mediation process and the risk that a diplomatic breakdown could directly implicate the country. The divergence came as a 60-day memorandum of understanding — reached between US and Iranian negotiators to extend the ceasefire and open the Strait of Hormuz — remained unsigned, pending Trump’s approval, Reuters reported.
“The agreement is both very far and very close,” Iran’s Foreign Ministry spokesman Esmail Baghaei said in a widely circulated statement, according to Iran International. The phrase captured the sense of suspended uncertainty that has defined Gulf investor sentiment since the ceasefire in April.
US Secretary of State Marco Rubio told reporters last week that an announcement on the peace talks could come soon, while cautioning that any deal might be time-limited rather than a permanent settlement. Rubio’s remarks, reported by Polymarket and confirmed by CNBC, briefly lifted regional market confidence before renewed ceasefire violations reintroduced doubt.
The proposed memorandum of understanding, first reported by Axios on May 24, would extend the existing ceasefire by 60 days, reopen the Strait of Hormuz to commercial shipping under prewar traffic levels, ease portions of the US naval blockade and some sanctions, and open formal discussions on Iran’s nuclear program and ballistic missile capabilities. Trump has proposed amendments to strengthen the terms before giving final approval, US sources told CNBC.
Qatar’s market decline on Sunday stood out given Doha’s deep involvement in the talks. Qatar has served as a primary diplomatic conduit between Washington and Tehran, hosting Iranian delegations and shuttling messages between the two sides, according to Reuters and Iran International. US officials described the appearance of an Iranian delegation in Doha as a positive sign, Iran International reported. But that proximity also exposes Qatar’s market to the sharpest swings when negotiations stall. Qatar National Bank, the largest lender in the Gulf by assets, declined as the index fell.
Saudi Arabia, by contrast, has been described by market analysts as the least directly affected Gulf market during the war. Ahmad Assiri, Research Strategist at Pepperstone, said in a note published by Zawya that the prospect of a reopened Strait of Hormuz had removed some of the extreme tail risk markets had been pricing in. “This looks more like tactical repositioning than fresh inflows,” Assiri said, adding that the durability of any rally would depend less on valuations and more on whether the conflict continued to de-escalate.
Trump on May 23 said in a Truth Social post that the deal was “largely negotiated” and would be announced shortly. He said he had held calls from the Oval Office with the leaders of Saudi Arabia, the UAE, Qatar, Pakistan, Turkey, Egypt, Jordan and Bahrain, as well as Israeli Prime Minister Benjamin Netanyahu, all focused on finalizing terms with Iran, according to CNBC. Trump also wrote on Truth Social that he would not rush into a deal, insisting time was on his side and that maximum pressure on Iran would remain in place until an agreement was “reached, certified, and signed.”
The conflict began on February 28, 2026, when Israeli and US forces struck Iranian targets, triggering Iranian retaliation across the region. Iran launched missiles at Saudi Arabia, and Iranian drones attacked a Saudi Aramco refinery in Ras Tanura on March 2, forcing its closure. The Tadawul opened 4.8% lower on the first Sunday after the strikes, according to reporting by Gulf News. A two-week ceasefire agreed in early April briefly eased tensions, but both sides subsequently accused the other of violations.
Pakistan has served as the primary external mediator in the talks, led by Field Marshal Asim Munir, who traveled to Tehran in late May to push negotiations forward, Axios reported. The broader regional mediation framework includes Saudi Arabia, Qatar, the UAE, Egypt, Turkey, and Jordan — all of which Trump contacted directly before the May 23 announcement.
Core disputes blocking a final agreement include the sequencing of sanctions relief versus nuclear concessions, limits on Iranian uranium enrichment, control over Strait of Hormuz traffic management, and the disposition of Iran’s enriched uranium stockpile, according to Axios and CNBC. Iran’s foreign ministry accused the US of violating the ceasefire with military strikes on May 24, the same day US officials said a deal was close, further clouding the outlook.
Negotiations are expected to continue through the coming days. Trump has not set a new public deadline following the lapse of earlier ultimatums. Rubio said an announcement could come imminently, though he offered no specific timeline. Regional leaders who were party to the May 23 conference call have all publicly expressed support for the proposed memorandum of understanding, according to sources cited by Axios. Whether Trump signs the MOU in its current form, requests further amendments, or allows the ceasefire to lapse without a successor framework will determine the next direction of Gulf markets.
