Six of the seven bourses dropped led by Saudi Arabia and Qatar, the biggest two Arab stock markets, while Omani shares rose slightly.
The Saudi Tadaul All-Shares Index dipped 2.36 percent to finish on 6,788.13 points with all the 15 sectors dropping.
Qatar Exchange shed 2.64 percent to 10,041.70 points while Dubai Financial Market Index was down 1.6 percent but stayed above the 3,000-point mark.
Abu Dhabi lost 1.3 percent, Kuwait dropped 0.83 percent while Bahrain was down just 0.23 percent.
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All the energy-rich Gulf bourses ended 2015 in the negative territory led by Saudi Arabia over the sharp decline in oil prices.
Saudi Arabia broke off diplomatic ties with Iran on Sunday after protesters set fire to its Tehran embassy and a consulate in second city Mashhad.
Riyadh ally Bahrain followed suit while the United Arab Emirates downgraded the level of its diplomatic relations with the Islamic republic.
In China, Shanghai equities market plunged seven percent over weak factory data triggering Asian and European stock markets to dive.
China is one of the largest buyers of Gulf crude oil and a key trading partner with the Gulf Cooperation Council, which comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.