(Bloomberg) — Most Middle Eastern equity markets dropped on Sunday amid an increase in geopolitical tensions after Iran seized a British oil tanker in the Strait of Hormuz.

The U.K. government is stepping up pressure on Iran to release the tanker seized over the weekend, demanding its immediate release and threatening Tehran with “serious consequences.”

Iran’s state-run Islamic Republic News Agency said the ship was seized after it crashed into a fishing vessel. Tensions have been flaring in the Strait in recent weeks as Iran lashes out against U.S. sanctions that are crippling its oil exports.

The Strait accounts for about a third of the world’s seaborne oil flows, with oil jumping in after-market trading last week following the episode. The equity gauges in Kuwait, Dubai and Saudi Arabia led losses in the region on Sunday.

The escalation in tensions has sparked an increase in volatility, which “creates some opportunities,” said Ali Taqi, the head of equities at Rasmala Investment Bank Ltd. in Dubai. “But then the impairment of visibility is the problem. How do you go from here? Your forecasting ability in case of a war is completely impaired. What we look for is the chances of how things are escalating.”

MIDDLE EASTERN MARKETS:

• The Tadawul All Share Index falls as much as 1.4%, before ending 0.8% lower
  • Saudi Telecom finishes down 0.2%, trimming losses of as much as 2%, after the country’s telecom watchdog imposed more than 18m riyals ($4.8 million) in fines on the three main telecoms operators for violating regulations
    • Etihad Etisalat Co. (Mobily) -3.3%; Zain Saudi -3.1%
• Also in Riyadh, Yanbu National Petrochemical falls 2.5% after posting 2Q profit that missed the lowest analyst estimate. It closed at the lowest level since Dec. 2017.
• Kuwait’s main index retreats 1.2%, trimming gains this month to 4.5%
  • Lenders KFH and AUB drop 1.4% and 2.5%, respectively
• Indexes in Dubai, Bahrain, Qatar, and Egypt decline as much as 0.9%, while those in Abu Dhabi and Oman increase as much as 0.6%

–With assistance from Yousef Gamal El-Din and Manus Cranny.