Iran strikes rock Gulf economies in biggest shock since pandemic

2026-03-02 - 06:57

Iran’s retaliatory missile strikes across the Gulf have caused the most extensive business disruption in the region since the COVID-19 pandemic, forcing airport closures, halting port activity and rattling financial markets, according to Reuters. The attacks — launched in response to a joint US-Israeli assault on Iran — struck every major Gulf state, shaking a region long regarded as one of the world’s most stable and business-friendly hubs. In the UAE, three people were reported killed, while loud explosions were heard for a second consecutive day in Dubai and Abu Dhabi. The escalation marks an unprecedented moment for Dubai, a city that has built its global brand on being insulated from regional conflicts and political instability. Market reaction was swift. Gulf stock exchanges opened sharply lower on Sunday, with Saudi Arabia’s benchmark index plunging more than 4 percent at the opening bell before closing down 2.2 percent. Oman fell 1.4 percent and Egypt dropped 2.5 percent, trimming earlier losses. Kuwait took the rare step of suspending trading until further notice, while UAE markets — closed on Sundays — are set to reopen Monday. The strikes reportedly targeted airports, military facilities, ports and hotels across the region. Both Dubai International Airport and Zayed International Airport in Abu Dhabi sustained damage, with one civilian killed and 11 others injured across the two locations. A berth at Jebel Ali Port in Dubai also caught fire following an aerial interception. Beyond immediate physical damage, the economic ripple effects are deepening. Analysts say higher oil prices may offer fiscal relief to major producers such as Saudi Arabia and Qatar by boosting revenues and liquidity. However, sectors such as trade, logistics and tourism — particularly in the UAE — face mounting pressure if maritime risks increase or investor confidence weakens. The timing compounds the impact. The strikes came during Ramadan, when corporate iftars and suhoors traditionally serve as key networking opportunities across the Gulf’s relationship-driven business culture. The disruption of this crucial social and commercial season represents a less visible but potentially significant economic cost. With shipping routes under threat and investor sentiment fragile, the region now faces a critical test of resilience amid one of its most volatile periods in years.