Share prices in the energy-rich Gulf states fell sharply on Thursday as oil dived to an 11-year low and China triggered a global markets rout.
The gloomy economic indicators combined with tensions between regional heavyweights Saudi Arabia and Iran to dent investor confidence, leading to a massive sell-off that sent prices crashing.
Markets in Riyadh and Dubai led the slide as both lost more than three per cent in early trading. The remaining five Gulf bourses were also down.
Minutes after opening, the Saudi Tadawul All-Shares Index shed 3.7 per cent to hit a three-year low.
The Dubai Financial Market Index lost around 4.0 per cent to fall below the key 3,000-point mark for the first time this year.
Its sister market in Abu Dhabi dipped 2.3 per cent to trade below 4,200 points.
Qatar Exchange, the region's second largest, dropped 3.0 per cent, falling below the 9,800 mark, with losses across all sectors.
The normally dormant Kuwait Stock Exchange followed suit, losing 1.7 per cent to trade at levels last seen 11 years ago.
The small Oman and Bahrain bourses lost 0.1 per cent and 0.7 per cent, respectively.
All Gulf stock exchanges ended 2015 in negative territory, led by Saudi Arabia, after the sharp decline in oil prices.
Riyadh broke off diplomatic ties with Iran on Sunday after protesters set fire to its Tehran embassy and a consulate in second city Mashhad.
Oil prices plunged close to $33 a barrel on Thursday, as crude extended losses on rising US energy stockpiles and China's weakening currency.
Beijing suspended trading at its two bourses after losses reached seven per cent due to a poor economic outlook in the world's second largest economy.
European stock markets tumbled at the start of trading Thursday following heavy sell-offs across Asia.