All seven bourses, most of which resumed trading Sunday after a week-long Muslim holiday, ended in the red with Saudi Arabia and Dubai taking the lead.
The Saudi Tadawul All-Shares Index (TASI), the largest in the Arab world, tumbled 6.51 percent to close at 10,145.38 points, its lowest level since July 22. All but one of the 161 listed companies dropped.
The Dubai Financial Market index, which has made the largest gains among the Gulf markets so far this year, shed 6.54 percent to close at 4,619.60 points -- its lowest point in about three months.
Market leader property giant Emaar dropped 7.42 percent while construction firm Arabtec shed the maximum allowed 10 percent.
Abu Dhabi bourse dropped 3.5 percent to close at 4,899.67, below the 5,000-point psychological barrier, Qatar Exchange lost 3.0 percent and Kuwaiti shares closed down 1.0 percent.
The Omani and Bahraini bourses lost 2.2 percent and .034 percent, respectively.
"The markets are certainly impacted by the continued drop in the prices of oil which generates most of the income for the Gulf states," Ziad Chehab, vice president for research at Kuwait's KAMCO investments, told AFP.
Signup to our newsletter and follow us on Facebook and Twitter!
Since June, Brent crude has lost about $25 a barrel to fall below $90 a barrel, the lowest in four years.
"The geopolitical events and fighting in the region are weighing heavily on the Gulf stocks. The International Monetary Fund lowering of global growth forecast is also influencing regional shares markets negatively," Chehab said.
The falls came after major stock markets around the world lost ground following the gloomy IMF forecasts.
The IMF on Tuesday trimmed its 2014 global growth forecast to 3.3 percent, down 0.1 percentage point from July, as it warned of stagnation in advanced economies and highlighted risks from the Russia-Ukraine crisis, strife in the Middle East and the Ebola epidemic.
The Fund lowered its growth forecasts for the Middle East and North Africa region to 2.6 percent from the 3.2 percent it had projected in April, mainly because of conflicts.
The IMF said the six states of the Gulf Cooperation Council, which pump 17 million barrels of oil daily, will grow at 4.5 percent in 2014-2015.
But it also stressed that the six would stop posting budget surpluses in 2017 because of the sharp drop in oil prices and high spending.
The GCC states have posted huge budget surpluses for most of the past 15 years because of high oil prices.
According to the Sovereign Wealth Funds Institute, they have assets worth $2.45 trillion managed by their sovereign wealth funds.