The Saudi Tadawul All-Share Index has soared to a level last seen in the autumn of 2008 on the strength of high oil prices and indicators that Asian demand for the commodity will not slacken.
In a run for which market watchers would have to go back to August 2005 to find a repeat, stocks have risen for 11 straight days. The index was up 1.52 per cent on Saturday, closing at 7,336.22.
Oil accounts for more than 90 per cent of Saudi Arabia's exports and nearly 75 per cent of government revenues. Demand for the commodity from Europe is expected to wane as member states react to the unwinding of their debt spiral with slower growth.
However, Chinese manufacturing grew for a third month in February, a signal the world's second-largest largest economy - and one of the largest importers of oil - is weathering the threat of a global slowdown.
"Markets seem to be banking both on a strong global economic recovery and further monetary easing, as well as [being] complacent over the risks of a renewed escalation of the crisis in the euro zone," Capital Economics said in a note.
The spot price of a barrel of Brent crude was US$124.39 yesterday. Capital Economics put the additional premium in oil prices due to tension between the West and Iran at close to $10 per barrel. It added that Iran's difficulty in finding alternative buyers for its oil in Asia suggested the global market was less tight than many assumed.
Oil jumped 4.8 per cent on Thursday after reports on Iranian state television that an explosion had destroyed a Saudi pipeline.
The price fell back again after the kingdom denied the report.