Stock markets in Saudi Arabia and Qatar posted broad-based gains on Sunday after OPEC and non-OPEC oil producers a day earlier reached their first deal since 2001 to curtail oil output jointly in a drive to prop up prices.
It is not clear whether oil prices can rise much further in response to the deal, and many fund managers think Saudi petrochemical shares are to a large extent now fairly valued after their rebound in the past six weeks.
Nevertheless, the oil producers' deal supported fresh buying of stocks and the main Saudi index added 1.1 percent to 7,198 points, its highest close this year, in heavy trade.
The Saudi petrochemical index surged 2.4 percent as higher oil prices could boost profit margins. Saudi International Petrochemical Co (Sipchem)
gained 4.0 percent after saying an affiliate had signed a contract with South Korea's eTEC E&C for work costing 542.6 million riyals ($144.6 million) to raise the efficiency of operations at its methanol plant in Jubail.
Construction firm Khodari jumped by its 10 percent daily limit in very heavy trade to 12.95 riyals, nearing major technical resistance on its May peak of 13.10 riyals.
The stock has been buoyed in recent days by signs that the government is making long-delayed payments on its debts to the construction sector, which could help Khodari directly and also indirectly by improving liquidity in the economy and helping some stalled projects go ahead. Higher oil prices may make it easier for the government to find money for those payments.
Some insurance sector stocks favoured by local retail speculators also surged, with Wafa Insurance up 6.4 percent.
In Qatar, the index added 1.3 percent at 10,188 points, climbing above technical resistance on the 200-day average for the first time since early November, although trading volume was modest.
Mesaieed Petrochemical gained 3.7 percent and oil drilling rig provider Gulf International Services surged 2.5 percent, while Qatar Commercial Bank jumped 4.1 percent. Bourses in the United Arab Emirates, Bahrain and Egypt were shut to mark the Eid-e-Milad-un-Nabi (PBUH).
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