Dubai's primary share index fell 0.2% on Friday, closing near a seven-week low as escalating tensions in the Middle East continued to suppress investor appetite for regional risk.
The decline marks the second consecutive session of losses for Gulf equities, following a 0.3% drop on Thursday.
The sell-off reflects growing anxiety over the potential for a wider regional war after a new wave of US military strikes targeted Iranian sites earlier in the week.
Saudi Arabia's benchmark index also retreated, continuing a downward trend that has persisted since hostilities between the United States and Iran intensified.
Investors are increasingly pricing in the risk of supply chain disruptions and broader economic instability across the Gulf Cooperation Council region.
Market participants are now focused on diplomatic developments and any further military escalation that could impact energy flows and regional stability.