May 18 (Reuters) - Gulf stock markets fell on Monday, hit by a global sell-off amid escalating tensions in the Middle East after the United Arab Emirates said drones targeted an area near the Barakah nuclear power plant and Saudi Arabia announced it had intercepted three drones.

The UAE Ministry of Defense said it was investigating the source of the attack and that it had intercepted two drones, while a third drone crashed near the Barakah nuclear power plant.

The ministry added that the aircraft were launched from the "western border" without providing further details.

Saudi Arabia said the three aircraft it intercepted entered from Iraqi airspace, warning that it would take the necessary measures to counter any attempt to infringe on its sovereignty or security.

Oil prices rose to a two-week high as efforts to end the US-Israeli war on Iran slowed, adding to the broad sell-off in global markets.

The Dubai index fell 1.7 percent, declining for the seventh consecutive session and its longest losing streak in more than two years, pressured by real estate, industrial and consumer discretionary stocks.

Shares in Emaar Properties fell 3.6 percent, while shares in Emirates NBD, Dubai's largest bank, declined 1.7 percent. Shares in low-cost carrier Air Arabia dropped 3.3 percent.

The Abu Dhabi index fell 1.2 percent, with all sectors closing in negative territory, led by technology, utilities, and real estate. Abu Dhabi Commercial Bank shares dropped 4.9 percent, while Aldar Properties shares declined 3 percent.

“Despite the downside risks in the short term, markets still retain upside potential in the long term, supported by major investment initiatives such as ADNOC’s plans to increase production levels, as well as broad government initiatives such as the UAE and Oman corridors and the expansion of oil pipeline capacity,” said Milad Azar, market analyst at XTB Middle East and North Africa.

The Qatari index fell 1.1 percent, weighed down by losses across all sectors. Qatar National Bank, the region's largest bank, dropped 1 percent, while shares of Industries Qatar declined 1.3 percent.

The Saudi index fell 0.1 percent, continuing its losses for the fifth consecutive session, amid pressure on shares in the industrial, consumer basic goods and materials sectors.

Shares of Saudi Arabian Mining Company (Ma'aden) fell 1.5 percent, and shares of Riyad Bank declined 1.2 percent. Shares of Saudi Chemical Company Holding rose 4.2 percent after the announcement of an agreement to supply military equipment to the National Mechanical Systems Company.

Azar added, "The Saudi market has remained under some pressure, but it may find support from the energy sector and rising oil prices."

The Kuwaiti index fell 0.4 percent to 9,161 points. The Bahraini index declined 0.7 percent to 1,920 points. The Omani index lost 2.4 percent, closing at 7,749 points.

Outside the Gulf region, Egypt's blue-chip index fell 0.7 percent, with Commercial International Bank down 1.1 percent and Fawry, a banking technology and electronic payments company, losing 2 percent.