Stories

Wed, 06 May 2026

Wed, 06 May 2026 Gulf economies face long-term hit from Iran conflict

Commentators say it will take years or even decades to repair the damage.
Qatar's success story in becoming one of the world's richest countries has been shaken by an Iranian ballistic missile strike on its main gas complex, Ras Laffan, which knocked out 17% of global LNG supply. The attack will cost QatarEnergy $20 billion in lost annual revenues and disrupt supplies to key markets in Asia, including China. Repairs are expected to take between three to five years. The damage has also had a ripple effect across the Gulf region, with over 80 facilities hit since the US and Israel launched strikes on Iran. The International Energy Agency estimates that up to $58 billion of damage has been caused, with more than a third of damaged facilities severely impacted. The World Bank has cut its growth forecast for the Middle East to 1.8% this year, warning of long-term "scarring" due to the conflict. Qatar and Kuwait are expected to see significant contraction, while Saudi Arabia and the UAE have shown resilience primarily due to oil exports that do not transit through the Strait of Hormuz. The closure of the Strait has sharply reduced oil and gas exports, with Gulf producers forced to rely on alternative routes. The head of the International Energy Agency has described the situation as the "biggest energy crisis in history". Qatar's finance minister has warned that the full economic fallout from the Iran war is yet to be felt, while experts predict that countries such as Qatar and Kuwait may develop pipeline networks as an alternative to tanker ships. The conflict has also had a broader impact on the economy, with travel and tourism hit hard. The World Travel & Tourism Council estimates that the Middle East is losing around $600 million a day in tourism revenues since the war began. Financial system stresses are emerging, with the UAE considering external financial backing from the US. However, the country has played down the development, while its ambassador to the US said suggestions of requiring external support "misread the facts". The conflict may also impact economic diversification programmes of Gulf nations, which have invested billions in sectors such as artificial intelligence and sports to reduce dependence on oil revenues. Unless there is a permanent deal to end the conflict with Iran, with guarantees that the Strait remains open, the economic strain could deepen further.