US-Iran strikes disrupt businesses, economy across Gulf region

2026-03-02 - 11:24

DUBAI – The US and Iran strikes across the Gulf region have resulted in significant disruptions, marking the most widespread business interruptions in the area since the COVID-19 pandemic. The Iranian strikes in response to a combined US-Israeli assault on Iran have caused airport shutdowns, port operations to halt and sent shock waves through the region’s financial markets. The attacks targeted major Gulf States and disrupted key infrastructure, threatening the region’s longstanding reputation as a stable business hub. In the United Arab Emirates (UAE), three people were killed, and loud explosions were reported in Dubai and Abu Dhabi on Monday, continuing for the third day in a row. This escalation represents a sharp departure for Dubai, a city that has long prided itself on being insulated from regional conflicts. From its humble beginnings as a small fishing village, Dubai has used modest oil revenues to build world-class infrastructure, including ports, airports, and trade centers. By the 1990s, it had shifted its focus to luxury tourism, real estate, and financial services. Vijay Valecha, Chief Investment Officer at Century Financial, commented on the economic consequences, saying, “The regional impact on Gulf economies is mixed. High oil prices provide financial stability for oil-producing countries like Saudi Arabia and Qatar, strengthening revenues and liquidity. However, sectors such as trade, logistics, and tourism, particularly in the UAE, will likely feel pressure if shipping risks rise or regional sentiment weakens.” Stock markets in the Gulf were hit hard when trading resumed on Sunday. Saudi Arabia’s benchmark index fell by over 4% at the open, eventually closing down 2.2%. Oman dropped 1.4%, while Egypt lost 2.5%, though both markets pared earlier losses. On Monday, Qatar’s index showed a 2% drop in early trading. The effects were felt globally as well. Brent crude oil prices surged above $78 per barrel on Monday, up from $72.87 on Friday. Meanwhile, Asian stock markets saw declines, with Japan’s Nikkei down by 1.6%, Hong Kong’s Hang Seng losing 1.8%, and Taiwan’s benchmark falling by 0.9%. In response to the turmoil, the UAE took the unusual step of closing its financial markets on both Monday and Tuesday, while Kuwait suspended trading until further notice. “Markets will remain volatile as long as military actions continue,” stated Mohammed Ali Yasin, CEO of Ghaf Benefits, a Lunate company in Abu Dhabi. He explained, “During such crises, international institutional investors often trigger selling pressure, while local investors attempt to mitigate losses by purchasing leading stocks.” Iran’s counter strikes have targeted key infrastructure in the Gulf, including airports, military sites, ports and hotels. Both Dubai International Airport and Abu Dhabi’s Zayed International Airport were damaged. One person was killed and 11 others injured at the two airports. Additionally, a berth at Dubai’s Jebel Ali Port caught fire following an aerial interception. The counter strikes have also affected several major UAE companies, including Emaar Properties and Majid Al Futtaim, with Dubai increasingly becoming a hub for global hedge funds and financial institutions due to its proximity to sovereign wealth funds such as ADIA and Mubadala. The timing of the strikes has compounded the issue for the Gulf region, as they occurred during the Islamic holy month of Ramadan, a time when corporate iftar and suhoor events—important for business networking—are held. Emails obtained by Reuters indicate that events hosted by Dubai-based Emirates, Masdar, Mubadala, GEMS Education, and the Department of Government Enablement have been either canceled or postponed. The counter strikes also hit residential areas near iconic landmarks such as Dubai Marina and Palm Jumeirah. The Fairmont The Palm hotel was severely damaged, with flames engulfing the property. This hotel had recently been sold for $325 million to Kuwait’s Arzan Investment Management, symbolizing the region’s growing demand for hospitality services. The damage to such high-profile properties underscores the toll on the region’s tourism economy. In response to the escalating situation, the United States, the United Kingdom, and the European Union issued updated travel advisories for the Gulf region, urging citizens to avoid non-essential travel. The key transit airports, including those in Dubai, Abu Dhabi, and Doha, were either shut down or severely restricted on Sunday as much of the region’s airspace remained closed. Amazon’s Cloud Division AWS faces disruptions in Bahrain, UAE amid US-Iran strikes