War Changes Everything
The US-Israel strikes on Iran launched on 28th February are the week's defining event. Iran's supreme leader was killed, retaliatory attacks hit GCC ports and airports and the Strait of Hormuz.
The US-Israel strikes on Iran launched on 28th February are the week's defining event. Iran's supreme leader was killed, retaliatory attacks hit GCC ports and airports, and the Strait of Hormuz — through which roughly 20% of global oil supply flows — is effectively closed. Over 3,000 flights were cancelled across regional hubs.
Brent crude surged 10–13% to $82/barrel, with $100/barrel flagged if disruptions persist. European natural gas nearly doubled, briefly spiking above €60/MWh before easing. Marine insurers have withdrawn war risk coverage and major container lines, including Maersk and Hapag-Lloyd, have suspended Strait transits.
Markets: Shock, Then Partial Recovery
Global equities sold off on Monday across banking, tech and airlines. US markets partially recovered on hopes of a swift resolution; European and Asian indices closed in the red. The USD strengthened to a six-week high. Gold surged. The UAE and Kuwait temporarily suspended domestic capital markets to prevent panic-selling.
The analyst's base case remains a weeks-not-months conflict. The US has stated regime change is not the goal, ground troops are considered highly unlikely and OPEC+ spare capacity is sufficient to cover full Iranian supply loss — if the Hormuz blockade lifts. That last caveat is doing a lot of work.
UAE Banking: Holding the Line
CBUAE Governor Khaled Balama confirmed banks are operating normally, with capital adequacy at 17% and a liquidity coverage ratio above 146.6% — both above international thresholds. Total sector assets exceed AED 5.42 trillion. Some lenders saw brief digital outages; ADCB restored mobile banking after 48 hours with no data compromise — likely cyber-related, given over 150 hacktivist incidents were recorded in the first 48 hours of conflict, targeting regional financial and critical infrastructure.
Regional Snapshot
- Saudi Arabia: Already carrying its largest deficit since the pandemic (SAR 276.6bn in 2025), now facing added defence and infrastructure repair costs.
- Bahrain: Fitch downgraded to "B" — the most exposed GCC sovereign, given low reserves and elevated debt.
- Egypt: Bright spot. IMF unlocked $2.3bn in new funding; remittances hit a record $41.5bn (+45% yoy); GDP growth forecast at 5.1% this fiscal year.
The Number That Matters
Everything pivots on Hormuz. A swift reopening keeps this a sharp but manageable shock. A prolonged closure pushes oil toward $100, reignites global inflation and corners central banks already navigating slowing growth. The structural lesson, per Dr Saidi: the GCC must urgently develop overland pipeline and rail alternatives — this crisis has exposed a vulnerability that is now costing the region dearly.
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