CEASEFIRE- A Fragile Truce Buys Two Weeks — but the Terms Remain Fiercely Contested
Less than two hours before Trump's deadline for Iran to reopen the Strait of Hormuz, the United States and Iran agreed to a two-week ceasefire — announced via a Truth Social post and brokered by Pakistani Prime Minister Shehbaz Sharif and Field Marshal Asim Munir.
Less than two hours before Trump's deadline for Iran to reopen the Strait of Hormuz, the United States and Iran agreed to a two-week ceasefire — announced via a Truth Social post and brokered by Pakistani Prime Minister Shehbaz Sharif and Field Marshal Asim Munir. Trump described Iran's 10-point plan as a "workable basis on which to negotiate," adding that "almost all of the various points of past contention have been agreed to," with the two-week window intended to finalise a permanent accord. The relief was short-lived in its clarity. JD Vance called the result a "fragile truce," while Iran's Supreme National Security Council framed it as an "enduring defeat" for Washington — claiming it had forced the US to accept its framework as a basis for talks, even as Tehran signalled it was reviewing a separate 15-point US counterproposal.
Iran's 10-point plan, released via state media IRNA, includes a US commitment to non-aggression, a Hormuz transit protocol, the end of hostilities across the Axis of Resistance, full war-damage reparations, withdrawal of US military forces from the region and a cessation of combat on all fronts — including Lebanon. That last point remains a live fault line: Netanyahu stated the ceasefire would not extend to Hezbollah or Israel's invasion of southern Lebanon, directly contradicting Pakistan's announcement that the truce was region-wide. On the day the ceasefire took effect, Gulf states including Kuwait, the UAE, Bahrain, Iraq and Saudi Arabia reported intercepting missiles and drones, with a fire igniting at Abu Dhabi's Habshan gas complex and a Saudi pipeline hit directly. Iran accused the United States of violating the agreement before the ink was dry.
MACRO CONTEXT US growth slows, inflation set to spike — the war's economic bill comes due
US GDP grew at a 0.7% annualised rate in Q4 2025, revised sharply down from a prior estimate of 1.4%, with government spending — reduced partly by a record 43-day shutdown — the primary drag. Final sales to private domestic purchasers came in at 1.9%, also revised lower. The outlook deteriorates from here. US inflation held at 2.4% in February, with core at 2.5%, but the March reading is expected to show a significant jump: petrol prices that fell 5.6% year-on-year in February have surged more than 20% since the US launched the war in Iran.
In the Gulf, Saudi Arabia's GDP expanded 5.0% year-on-year in Q4 2025, driven by oil sector growth of 10.8% and non-oil gains of 4.3%, with full-year 2025 growth reaching 4.5% — well ahead of 2024's 2.7%, primarily on the reversal of prior OPEC+ production cuts. That momentum faces near-term pressure: Nasser Saidi notes that Saudi non-oil PMI is likely to soften through mid-2026 as input prices for construction and technology imports rise, potentially slowing giga-project execution. The UAE's consolidated net financial assets, estimated at 184% of GDP in 2026 and general government debt of around 27% of GDP, remain the region's primary buffer against external shocks.
MARKETS Risk-off turns regional — DFM bears the brunt, Aramco surges
Global equities declined sharply as geopolitical risk escalated: the S&P 500 fell 1.6%, the Nasdaq dropped over 1%, Europe's STOXX 600 slipped 0.5%, and Asia ex-Japan plunged 2.0%. In the region, Dubai's DFM fell 8.3%, while Aramco rallied nearly 13% on elevated crude prices. Brent surged above $100 per barrel for the first time since August 2022 — up from around $60 at the start of 2026 — as markets priced Hormuz disruption risk into global supply forecasts. Currency markets moved in tandem with the risk-off impulse, the dollar strengthening against the euro, pound and yen — the latter weakening to its softest level since July 2024.
DUBAI TOURISM A Dh1 billion lifeline, 60% cancellations, and a recovery contingent on peace holding
Within weeks of the first strikes, Sheikh Hamdan bin Mohammed approved an economic package of Dh1 billion — roughly $272 million — to stabilise hospitality and tourism. Emirates was flying to 125 of its usual destinations within days of restarting operations, against a pre-conflict network of 140+ routes. The Dubai Executive Council has also approved a further Dh1 billion in short-term economic incentives running from April to September, including a three-month waiver on Tourism Dirham and hotel sales fees, alongside deferrals on select business and licensing charges.
The damage, however, has been substantial. Dubai hotel booking cancellations ran at 60% of existing reservations within 48 hours of the Hormuz escalation, with group bookings — conferences, incentive travel, weddings — approaching 80% cancellation rates. Hotel occupancy fell from 86% in January to as low as 15–20% in some areas by early March. Flydubai is operating at roughly 40% of pre-conflict capacity, while an EASA airspace advisory remains active until at least April 10 — its potential lifting seen as a trigger for a meaningful jump in European carrier resumptions. Issam Kazim, CEO of Dubai's Department of Economy and Tourism, has publicly affirmed that the city remains safe and fully operational, pointing to record 2025 arrivals of 19.59 million as a baseline from which the sector intends to recover.
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