Oil fell below US$118 a barrel yesterday, stifling momentum for listed equities in the Gulf states, as debt crises in Europe and the US continued to drag on global sentiment.
Brent crude for September was 80 US cents lower at $117.87 a barrel, after falling by more than $1 earlier in the session.
In Europe, Moody's Investors Service downgraded the sovereign debt of Greece by another three notches, indicating the agency believes a default is all but inevitable.
In the US, Congress continued to debate the national debt ceiling with no resolution in sight.
"It's bad news all round, sadly that is what's affecting the Saudi market and our local markets," said Haissam Arabi, the chief executive and fund manager at Gulfmena Investment.
"The world is facing a potential crisis Ö Global markets will set the tone for the whole region," he added. The Abu Dhabi Securities Exchange General Index was down 0.8 per cent to 2,663.13 points.
Aldar Properties, the capital's largest developer, declined 0.7 per cent to Dh1.25 a share. Sorouh Real Estate, Abu Dhabi's second-biggest property developer, lost 2.4 per cent to Dh1.21.
The Dubai Financial Market General Index lost 0.6 per cent to 1,510.58 points.
Emaar Properties, the region's biggest developer, dropped 2 per cent to Dh2.89, accounting for more than a third of the trading on the Dubai bourse yesterday.
Elsewhere in the region: Kuwait's measure declined 0.2 per cent to 6065.30 points; Bahrain's index was unchanged at 1,298.95; and Qatar's index was little changed at 8,399.80 points.
The Saudi Tadawul All-Share Index was down 0.8 per cent to 6,472.03 points.