The Dubai Financial Market General Index closed down the most in two weeks yesterday as oil fell to US$120 a barrel.
The price of a barrel of Brent crude dropped $1.83 to $120 during the day, the lowest the commodity has been for a week, after UN officials spoke to Iranian officials about that country's nuclear programme, according to reports.
Oil had been rising this year on supply fears after an embargo was put on Iranian oil.
In Saudi Arabia, the world's leading oil exporter, the Tadawul All-Share Index was trading down 0.8 per cent at 7,289.47 during the day. It closed down 70.44 to 7277.89.
UAE indexes closed in the red, taking their lead from the Saudi market, according to analysts. The Dubai Financial Market General Index closed down 1.55 per cent at 1,649.25. The Abu Dhabi Securities Exchange General Index closed down 0.5 per cent at 2,499.67.
The three indexes have rallied so far this year, although recent performance has been more volatile.
But analysts said both regional and global stock markets were nearing levels where investors could be looking to get back into the market.
"According to performance most markets are approaching support levels globally and locally, which should be an indication most of the selling pressure is behind us and investors will start to look to buy again," said Marwan Shurrab, chief trader at Gulfmena Investments.
On the Dubai bourse, Arabtec Holding closed down 1.55 per cent. Deyaar Development closed 3.51 per cent lower.
On the Abu Dhabi bourse, The National Corporation for Tourism and Hotels was up 9.89.