The US-Israel war with Iran has forced the Gulf states to reassess long-held assumptions about security, alliances and stability in their region. What does this mean for the future?
For the regional Gulf Cooperation Council (GCC) states — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) — the consequences of the US-Israeli conflict with Iran extend far beyond immediate military threat.
Since February 28, when the US and Israel launched joint strikes on Iran, and despite a nominal ceasefire, the GCC countries, have been performing a difficult balancing act. Key infrastructure in the region is being targeted by thousands of ballistic missiles and drones while the blockade of the Strait of Hormuz by — imposed by both Iran and the US — has had a major impact on trade and economic stability. At the same time, Gulf governments have been trying to avoid being drawn deeper into the conflict.
‘Sea change in perception of security and politics’
In recent years, the Gulf states, and particularly Saudi Arabia, have implemented ambitious economic reforms aimed at diversifying their economies and reducing dependence on oil revenues. Increasingly, these overhauls have shaped foreign policy too, as tourism, aviation, logistics, and artificial intelligence have become core pillars of national development strategies .
But a new era is underway, according to Cinzia Bianco, a Gulf analyst at the European Council on Foreign Relations who recently returned from the UAE. “The Iran war has prompted a sea change in their perception of security and politics,” she told DW.
Meanwhile, uncertainty has rattled the tourism sector.
In March, Dubai International Airport was struck by drones launched by Iran and more than 30,000 flights to and from the Middle East were cancelled. Several airlines are still operating reduced schedules. Also jet fuel prices have almost doubled year-on-year due to the blockage of the Strait of Hormuz.
“The Gulf’s image as a safe haven has certainly been shattered in the short to medium term,” said Pauline Raabe, a Gulf observer at the Berlin-based Middle East Minds think tank.
“Potential tourists have been reminded of where the country is located, namely, in the midst of a geopolitically tense region,” she said. “They will now think twice or even three times before deciding whether to go to the Emirates.”
Financial analysis firm Moody’s recently forecast that hotel occupancy in Dubai would plummet from 80% to 10% in the second quarter of 2026.
In April, the World Bank cut its economic growth forecast for the GCC from 4.4% to 1.3%.
Impact on energy infrastructure
Apart from airports, Iran has also targeted hotels and US military bases in Gulf countries, as well as taking aim at local energy infrastructure. QatarEnergy, Qatar’s state-owned energy company, said it would take up to five years to repair the Ras Laffan industrial hub after it was struck by an Iranian ballistic missile in March.
QatarEnergy’s chief executive, Saad Al Kaabi, told British broadcaster BBC that the scale of the damage had “set the region back by 10 to 20 years.”
Iran and the US, meanwhile, continue to use their blockades of the Strait of Hormuz as a “pressure card” for peace negotiations.
Meanwhile, oil and gas exports from Bahrain, Kuwait and Qatar remain disrupted. Moody’s recently downgraded Bahrain’s outlook from “stable” to “negative.”
However, for Oman, Saudi Arabia and the UAE the economic outlook is somewhat different, as they have access to bypass infrastructure: Saudi Arabia has diverted some of its output to its east-west pipeline to the Red Sea, and the UAE uses a local onshore pipeline from Habshan to Fujairah for exports.
According to Saudi Arabia’s state oil company, Saudi Aramco, the first quarter of 2026 saw a 26% jump in profits. As the UAE left the Organization of the Petroleum Exporting Countries (OPEC) and the wider OPEC+ alliance on May 1, 2026, it can now decide independently from the quota system that limits how much oil each member can produce.
How will recovery take shape
Analysts predict that even after the current war and the reopening of the Strait of Hormuz — a key waterway for the transport of one-fifth of global oil supplies — higher risk premiums will continue to drive up prices in the Gulf region.
Raabe believes that the financial sector will be among the first to recover. “I assume that once the war is over, or at the very least, once the immediate fighting has ceased for the long term, this established infrastructure will rebound more quickly,” she told DW.
“A number of assumptions have been questioned, including, for example, that you can give economic stakes to the Iranian regime to guarantee your security,” said Bianco. In her view, this is no longer considered a reasonable idea, and nor is the assumption that the Gulf states can rely exclusively on the US for their security.
As a result, new defense pacts are underway: In May, the UAE signed a deal with France and Qatar signed a new Memorandum of Understanding (MOU) with Canada. Israelreportedly sent its Iron Dome air defense system as well as operating personnel to the UAE for the first time. Both countries normalized relations in 2020, which is widely seen as one of the reasons why the UAE has been a key target of Iran.
So far, the UAE has refrained from completely severing diplomatic ties with Iran. “Instead, they have publicly sought to adopt a rhetoric of de-escalation and regional coexistence,” Raabe noted.
For Mona Yacoubian, director and senior adviser of the Middle East Program at the Center for Strategic and International Studies (CSIS) in Washington, and Will Todman, senior fellow in the Middle East Program at CSIS, all of this is part of a “new normal” in which the Gulf will need to manage Iran. “Iran is here to stay,” the authors recently wrote in an analysis of the think tank’s website.
Cinzia Bianco echoed this view. “The Gulf states are seriously entertaining the idea that the risk of instability will become a constant in their security and political life,” she said, predicting an even more authoritarian approach. (DW)
