Oman's Muscat Securities Market 30-share index fell 3.21 per cent to 4948.48 the most since December 2014.

This was the benchmark index's first drop below the 5000-level since April 2009.

Acute selling pressure was seen in the market with the Financial sub-index taking a thrashing losing 4.17 per cent.

'The Oman market's fall was characterised by aggressive selling by institutional investors - foreign regional and local. Foreign and regional investors were aggressive sellers in banks and telecom stocks. However we saw foreigner buying as well at lower levels in select stocks such as Bank Muscat which helped it recover from the day's low' according to Joice Mathew senior manager for research at United Securities.

Ominvest was the sole gainer on the MSM. 'We saw remarkable resilience in Ominvest as local institutions were active on the counter. Many stocks are available at attractive valuations but investors tend to forgo valuations as fear grips in' Mathew said.

Saudi Arabia's Tadawul all share index dropped 7.2 per cent in Riyadh to its lowest level since March 2011. Abu Dhabi's ADX general index fell into a so-called bear market.

Iran's Tedpix index climbed 0.9 per cent according to data on the bourse's website extending Saturday's 2.1 per cent advance.

'We saw mayhem across all the regional markets amid the steep fall in oil prices over the weekend and increasing concerns of a global economic slowdown. As long as oil continues to trend at current levels the sell-off would continue in the riskier regional assets' said Kanaga Sundar head of research at Gulf Baader Capital Markets (GBCM) in Muscat.

Iran home to almost ten per cent of the world's proven oil reserves is starting preparations to boost exports after the United Nation's nuclear agency on Saturday said the country has complied with the terms of an international agreement to curb its nuclear programme. That threatens to put further pressure on prices hurting the oil-dependent economies of the GCC.

Iran is targeting an immediate increase in shipments of 500000 barrels a day Amir Hossein Zamaninia Deputy Minister for Commerce and International Affairs said on Sunday. It plans to add another half million barrels within months.

Concern that Iran may exacerbate the global supply glut sentBrent crude a benchmark grade for more than half the world's oil to a new 12-year low on Friday helping to spur a global stock rout.

The countries of the GCC account for about 30 per cent of the world's proven oil reserves.

Qatar's QE index tumbled 7.2 per cent the most since December 2009 and Abu Dhabi's ADX general index slumped 4.2 per cent to the lowest level since November 2013. It has declined 23 per cent since a peak in July.Dubai's DFM general index lost 4.6 per cent.

For the short term the [Oman] market is expected to remain volatile. While the current sell-off would create buying opportunities in quality stocks in Oman and also the region we advise investors to maintain caution and look for staggered buying looking at the long-term perspective GBCM's Sundar said.

- With inputs from Bloomberg AFP