Gulf Officials Seek to Calm Investors as War Rattles Confidence

The US-Israel-Iran war has sent shockwaves through global financial markets, prompting Gulf officials to take measures to reassure investors and stabilize the financial markets.

Immediate Market Reaction

The war has triggered an immediate sell-off in global equity indices, with the Dow, S&P 500, and Nasdaq declining by 1.47%, 1.40%, and 1.49%, respectively. Gulf markets have reacted fragmentedly, with Saudi Arabia and Oman rising on higher oil prices, while Dubai, Qatar, Bahrain, and Kuwait have suffered declines ranging from -16% to -7%.

Sector-by-Sector Impact

The energy sector has seen a strong upside, with Brent crude oil prices surging to $103.24 and WTI crude oil prices rising to $97.64. Defense and aerospace sectors have also seen positive moves, with Northrop Grumman, RTX, and Lockheed Martin rising by 6%, 4%, and 3%, respectively. In contrast, travel and tourism sectors have been negatively impacted, with airlines and hotel REITs declining by 4-7%.

Measures to Calm Investors

Gulf officials have taken several measures to reassure investors and stabilize the financial markets. These include a comprehensive review of sovereign-wealth-fund deployments, delay of new overseas commitments, force-majeure assessments on existing contracts, internal coordination among GCC finance ministries, and public reassurance at investor forums.

Key Quantitative Takeaways

• Trillions of dollars of SWF assets are under review.
• An estimated $30 billion in extra defense outlays have been announced across the GCC.
• Oil-export earnings are projected to decline by 15-20% in Q1 2026.

  Overall Strategy

  Gulf officials are employing a risk-mitigation review, fiscal protection, and investor communication strategy to navigate the economic challenges posed by the war.

Sources

• Ainvest – “Market Prices Catastrophic War in Gulf—Is the Worst-Case Scenario …”
• Funds Global MENA – “Gulf stock markets wobble as US–Israel–Iran war rattles regional investors”
• CNBC – “Gulf markets are splintering as the Iran war continues. Here’s what to know”
• Yahoo Finance – “UAE stock markets tumble o war impact”
• Reuters – “UAE stocks fall as fears of prolonged Middle-East conflict linger”
• Bloomberg – “Iran War Lifts Oil, Diverges Middle East Stocks, Threatens GDP”
• Gulf trio review sovereign investments to offset Iran war impact – Reuters
• Some Gulf states reviewing sovereign investments to offset economic shock of Iran war – Investing.com
• Gulf countries reviewing US investments amid Iran war – Dawn
• Gulf-US investments in focus at FII Miami as war tests appetites – The National