TASI Market Wrap — May 2026: Oil's Worst Month Since 2020, and a Market That Held the Line

May was the month the war premium drained out. TASI eased about 1 percent to close at 11,077, oil posted its worst month since 2020, and a long Eid break split the calendar in two, leaving a quiet tape that did more settling than moving. After the round trip of April, May was the market exhaling.

Oil leads the story down

The dominant force was crude. Brent opened May near $116 and fell to settle at $92.56 on May 29, a drop of roughly 19 percent on the month and its steepest since 2020, leaving the benchmark about 20 percent below its 2026 peak. The driver was diplomacy. The United States and Iran moved toward a 60-day framework to extend their ceasefire, with draft terms promising unrestricted Hormuz passage, and the market priced a return toward normal supply. For Saudi Arabia the move cuts both ways, softer prices on each barrel against the prospect of recovering the export volumes lost during the crisis.

A market that held the line

TASI itself was orderly. The index ran to an intraday high near 11,158 on May 11, dipped to about 10,956 by May 18, then held through the Eid Al-Adha holiday that closed trading for most of the final week, finishing the month at 11,077. A one percent monthly decline, with oil down nineteen, is the sign of a market that had already absorbed the war and was no longer trading tick for tick with the barrel. The market multiple compressed to about 16.7 times earnings from 17.8 in April, a valuation that looks more reasonable after a strong earnings season.

Earnings did the heavy lifting

Q1 results landed through May and they were strong. Total listed profit reached about SAR 166.5 billion, up 22 percent with Aramco and up 13 percent without it. Aramco reported $33.6 billion of net income, up 26 percent, helped by its East-West pipeline running at full capacity to route exports around Hormuz, and declared its SAR 82.08 billion base dividend for payment in June. Banks carried the rest, with Al Rajhi up 14 percent to SAR 6.75 billion and Saudi National Bank up 7 percent, while National Shipping more than tripled its profit and Petro Rabigh swung back to black. Aramco shares still fell about 4.5 percent on the month, tracking oil rather than earnings.

Flows, liquidity, and the pipeline

Foreign holdings stood at about SAR 457 billion at month end, below the levels of late 2025 as the crisis kept overseas money cautious, even with the market fully open since February. Average daily trading value was about SAR 5.73 billion, a step up from the 2025 run rate. The primary market stirred late in the month, with Mutlaq Al-Ghowairi setting its prospectus and book-build for the largest planned listing of the year, a deal that would not survive into June. The riyal held at 3.75 and SAMA left the repo rate at 4.25 percent.

May ended near 11,077, down a touch, with the war premium mostly gone and earnings doing the work. The setup heading into June was a market waiting on whether the Hormuz deal would turn from a framework into barrels on the water.