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Six Gulf bourses ended lower on Tuesday and the Saudi market was down 2.9 percent in the afternoon trade at levels last seen more than five months ago.

Saudi shares were shaken by the tensions and the arrest of several leading business figures including billionaire Prince al-Waleed bin Talal in what the authorities said was an anti-corruption sweep.

The decline was led by shares in Kuwait and Qatar, where the stock index dropped to its lowest level since March 2011 as the country reels from a five-month-old boycott by a Saudi-led bloc of Arab states.

The slump comes after oil prices climbed on Monday hitting a two-year high following the spate of high-profile arrests in Saudi Arabia on Saturday night.

The price of the benchmark US crude contract rose 25 cents to $55.89 per barrel in electronic trading on the New York Mercantile Exchange.

It rose as far as $56.28, its highest level since July 2015, and extended gains from last week.

Sunni-ruled Saudi Arabia and Shia Iran traded accusations after Saudi defence forces on Saturday downed a ballistic missile near Riyadh international airport, reportedly fired by Houthi rebels in Yemen.

Riyadh accused Iran of supplying missiles to the Houthis in what Crown Prince Mohammed bin Salman called a "direct military aggression" by Tehran.

The Boursa Kuwait index fell 4.4 percent at one point but recovered slightly to end the day down 2.8 percent.

The Dubai Financial Market index declined 1.8 percent to close the day below the 3,500-point level for the first time in four months.

The Abu Dhabi market dropped 0.35 percent, Bahrain's bourse slipped 1.0 percent and Muscat inched down 0.01 percent.