Iranian Strikes Shake Gulf Economies, Close Airports and Rattle Global Markets

BY MIRABLE ODETA

Retaliatory strikes launched by Iran across the Gulf have triggered the most widespread business disruption in the region since the COVID-19 pandemic, forcing airport closures, halting port operations and sending shockwaves through regional and global financial markets.

The attacks, carried out in response to a joint U.S.Israeli assault on Iran, struck every major Gulf state  an unprecedented escalation in a region that has spent decades cultivating its reputation as one of the world’s most stable and business-friendly hubs. Three people were reported killed in the United Arab Emirates, and loud explosions were heard for a third consecutive day in Dubai and Abu Dhabi on Monday, underscoring the sustained intensity of the crisis.

For Dubai in particular, the strikes represent a dramatic break from its carefully constructed image as a haven insulated from the turbulence that has often defined the broader Middle East. Once a modest fishing village, the emirate used limited oil revenues in the mid-20th century to build critical infrastructure, including ports and airports, before pivoting in the 1990s toward luxury tourism, real estate development and financial services. That diversification strategy transformed Dubai into a global crossroads for commerce, travel and investment  a status now under strain.

Analysts say the economic impact across Gulf economies will vary. Vijay Valecha, chief investment officer at Century Financial, noted that elevated oil prices may provide a fiscal cushion for major producers such as Saudi Arabia and Qatar, strengthening government revenues and liquidity positions. However, sectors heavily dependent on trade, logistics and tourism — particularly in the UAE  could face mounting pressure if maritime security risks increase or investor and consumer sentiment weakens further.

Stock markets across the region reacted sharply. Saudi Arabia’s benchmark index fell more than 4% at the open on Sunday before closing down 2.2%. Oman ended the day down 1.4%, and Egypt lost 2.5%, both trimming steeper earlier declines. Qatar’s main index was down 2% in early trading Monday.

The turmoil reverberated beyond the Gulf. Global benchmark Brent crude surged to just over $78 per barrel on Monday, up from $72.87 at Friday’s close, reflecting mounting concerns about energy supply disruptions. Asian equity markets broadly declined, with Japan’s Nikkei 225 falling 1.6%, Hong Kong’s Hang Seng Index dropping 1.8%, and Taiwan’s benchmark shedding 0.9%.

In a rare move, the UAE whose financial markets do not typically trade on Sundays closed its exchanges on Monday and Tuesday. Kuwait shut its market on Sunday and suspended trading until further notice, signaling the severity of the disruption.

Mohammed Ali Yasin, chief executive of Ghaf Benefits, a Lunate company based in Abu Dhabi, warned that markets are likely to remain fragile and volatile as long as military operations continue. He noted that international institutional investors often initiate selling pressure during geopolitical crises, while domestic investors attempt to stabilize markets by purchasing leading stocks.

The strikes targeted airports, military facilities, ports and hotels across the Gulf. Dubai International Airport and Zayed International Airport both sustained damage, with one civilian reported killed and 11 injured across the two sites. A berth at Jebel Ali Port caught fire following an aerial interception, disrupting operations at one of the region’s most critical shipping hubs.

The UAE is home to some of the region’s largest and most influential companies, including property developer Emaar Properties and retail conglomerate Majid Al Futtaim. It has also become a magnet for global hedge funds and multinational banks seeking proximity to sovereign wealth funds such as Abu Dhabi Investment Authority and Mubadala Investment Company, which collectively manage hundreds of billions of dollars in assets.

The timing of the disruption has compounded its economic impact. The strikes occurred during the Islamic holy month of Ramadan, a period when corporate iftars and suhoors — communal meals marking the breaking and beginning of the daily fast — serve as key networking events for executives and policymakers across the region. Emails reviewed by media outlets indicate that gatherings hosted by major organizations, including airline Emirates, renewable energy firm Masdar, Mubadala and education group GEMS Education, along with the Department of Government Enablement, have been canceled or postponed.

In a region where personal relationships underpin business dealings, the loss of Ramadan’s networking season represents a less visible but potentially significant economic cost layered atop the immediate physical damage.

Strikes also hit residential areas near Dubai Marina and Palm Jumeirah, setting the Fairmont The Palm ablaze and damaging the iconic Burj Al Arab. The Fairmont had recently been sold for $325 million to Kuwait-based Arzan Investment Management, a deal that had been viewed as a strong signal of surging Gulf hospitality demand. The damage to the property now stands as a stark symbol of the risks confronting the region’s booming tourism sector.

In response to the deteriorating security situation, the United States, the United Kingdom and the European Union issued updated travel advisories urging citizens to avoid non-essential travel to parts of the Gulf. Major transit hubs including Dubai, Abu Dhabi and Doha in Qatar were shut down or operating under severe restrictions on Sunday as much of the region’s airspace remained closed, further disrupting global travel and supply chains.