Most stock markets in the Gulf fell on Thursday, with the Saudi index wiping out its gains so far this year, as a red-hot U.S. inflation reading bolsters the case for supersized rate hikes by the Federal Reserve.

Wednesday's data showed U.S. consumer prices jumped 9.1% year-on-year in June, the largest annual increase in inflation in 40-1/2 years.

The data was seen as firming the case for the Federal Reserve to raise rates aggressively. Policymakers might consider a 100-basis-point increase in the July meeting, Atlanta Federal Reserve Bank President Raphael Bostic said.

Saudi Arabia's benchmark index dropped 1.1%, hitting its lowest since late-December, dragged down by a 1% fall in Retal Urban Development Company and Sahara International Petrochemical Co which dropped 8%.

Oil prices, a key catalyst for the Gulf's financial markets fell more than $2 as investors focused on the prospect of a large U.S. rate hike later this month that could stem inflation but at the same time hit oil demand.

Worries of COVID-19 curbs in multiple Chinese cities to rein in new cases of a highly infectious subvariant have also kept a lid on oil prices.

In Qatar, the index eased 0.1%, hit by a 3.7% decline in petrochemical maker Industries Qatar.

Elsewhere, the Kuwaiti index, which traded after a four-session break, concluded 0.5% lower.

Dubai's main share index advanced 1.3%, led by a 3.4% rise in top lender Emirates NBD and a 2.4% gain in blue-chip developer Emaar Properties.

The Dubai bourse rebounded from the previous session's fall, supported by the real estate sector which is seeing strong sales, said Eman AlAyyaf, CEO of EA Trading. "However, the sector and the market as a whole remain exposed to a more aggressive monetary policy in the U.S."

Abu Dhabi stocks added 0.9%, with the country's biggest lender First Abu Dhabi Bank closing 2% higher. 

(Reporting by Ateeq Shariff in Bengaluru; Editing by Vinay Dwivedi)