DUBAI—The prospect of Iranian oil flooding an already oversupplied crude market sent Saudi Arabian stocks sharply lower Sunday, while the end of economic and financial sanctions lifted Iranian equities.

Saudi Arabia’s benchmark Tadawul All Share Index tumbled 5.4% to 5520.41, leading an Arab Gulf markets rout as oil prices settled below $30 a barrel for the first time in 12 years amid worries that a global glut will continue as Iran increases its crude exports. Tehran Stock Exchange’s main TEDPIX index rose 0.9%, according to the bourse website.

An international equities sell off on concerns about the health of the global economy, especially China—the world’s second-biggest oil consumer, added to the regional gloom.

Qatar Exchange’s main QE Index fell 7.2% to 8527.75 at close, the Dubai Financial Market’s General Index shed 4.6% to 2684.92, and Abu Dhabi Securities Exchange’s General Index lost 4.2% to end at 3787.40.

“Tumbling U.S. stocks on Friday and oil prices plumbing multiyear lows ensured the Gulf markets’ selloff [Sunday],” said Mohammed Ali Yasin, managing director at NBAD Securities. “The prospect of more Iranian oil hitting the market has also now become a reality, weighing on already weak sentiment,” Mr. Yasin added.