TASI Market Wrap — March 2026: War Premium, Oil Windfall, and a Market Finding Its Floor

March 2026 was the month the Saudi equity market had to confront a scenario none of its models had priced in at the start of the year: a full-scale U.S.-Israeli military operation against Iran, triggering Iranian retaliation across the Strait of Hormuz and neighbouring states. TASI opened the first trading session after the initial strikes down as much as 5%, touching 10,214 — its lowest intraday level since March 2023.
The panic was real but contained. By the time the dust settled, investors had begun to perform the arithmetic that separates Saudi Arabia from virtually every other regional economy in this scenario: higher oil prices are unambiguously positive for the Kingdom's balance sheet. With Brent crude spiking above $110 per barrel at peak — Goldman Sachs had sharply revised its 2026 oil price forecast, projecting Brent averaging $85/barrel even after accounting for supply disruption risk — the Saudi government was generating a fiscal surplus that its own budget had not anticipated.
The Paradox of Conflict
Saudi Arabia's fiscal breakeven oil price — the level at which the budget balances — sits at approximately $78–85 per barrel according to IMF estimates. The 2026 budget had been constructed assuming oil around that range, implying a deficit of SAR 165.4 billion. With Brent north of $100, each additional dollar above breakeven translates into an unexpected surplus. Analysts at J.P. Morgan and Citigroup began recalculating their Saudi GDP forecasts upward, with 2026 growth estimates revised from 4.4% toward 5%+, driven primarily by the oil sector growing at 5.7%.
TASI's recovery from 10,214 to approximately 10,776 by mid-month reflected this fiscal recalibration. Aramco's stock — which had initially dropped with the broader market — staged an independent recovery as analysts revised earnings estimates sharply upward. The company's breakout above key technical resistance levels was cited by multiple desk notes as validating the fiscal windfall thesis.
March 12 Session — A Window Into the Recovery
By March 12, TASI had closed at 10,893, down just 2.99% for the month and 7.10% year-over-year — a dramatically better outcome than the intraday low of 10,214 had suggested. Insurance was the standout sector: Bupa Arabia gained 2.3%, Tawuniya added 1.5%, as demand for mandatory insurance products accelerated. Telecoms held (+0.5%), stc shares closing at SAR 52. Materials remained under pressure: SABIC fell 1.5% to SAR 82, its lowest in two months, as Chinese petrochemical competition continued to compress margins.
Q1 2026 Capital Markets Activity
Institutional activity told a more constructive story than the equity index alone. Negotiated deals — large block transactions executed between institutional counterparties outside the regular order book — reached 721 completed deals in Q1 2026, totalling SAR 8.9 billion in value. This level of negotiated deal flow signals continued confidence from the institutional investment community. By end-March, TASI had closed at 11,167 points for the quarter, representing a year-to-date gain of approximately 6.45% — positioning it among the stronger-performing emerging market indices in the region for the period.
April 2026 Outlook
April carries a Q1 earnings season that consensus expects to show banking sector profit growth of 8–12% year-on-year. Aramco's results will serve as the critical indicator for Q2 direction — a strong beat would cement the oil windfall narrative and potentially push TASI back above 11,500. The OPEC+ April meeting is a key event: any decision to accelerate production increases would pressure oil prices and reverse the fiscal surplus dynamic. Geopolitically, the Hormuz situation remains fluid. Our base case for April: TASI trades in the 11,000–11,600 range, with earnings season the primary upside catalyst. Downside risk: escalation in Hormuz beyond what markets have priced.