Unequal Impact of Iran War on Gulf Companies: What Investors and Business Owners Need to Know
Companies in the Gulf region, among the most directly impacted by the ongoing conflict with Iran, are set to provide clearer insights into the war’s regional financial effects as they report their second-quarter earnings this week.
Across countries including Saudi Arabia, Oman, the United Arab Emirates (UAE), and Qatar, corporate results are expected to present a mixed picture.
Banks and the real estate sector face significant exposure due to pre-existing challenges, which the conflict has intensified through its influence on inflation and interest rates. Conversely, telecommunications companies have remained largely insulated, benefiting from long-term contracts and relatively stable demand, according to analysts.
Energy firms have encountered supply disruptions during the four-month conflict, but have also potentially benefited from price volatility linked to the closure of the strategic Strait of Hormuz shipping channel.
Tariq Qaqish, deputy CEO of advisory firm FH Capital, noted, “The second quarter is going to reveal the real impact of the war.” He explained that the first quarter, only partially affected by the February-end outbreak of the conflict, had shown just initial effects on sectors such as tourism and aviation.
### Winners and Losers Vary by Geography
The economic fortunes of Gulf countries—many heavily reliant on hydrocarbons—hinge largely on their dependence on the Strait of Hormuz, the Gulf’s sole sea access point.
Saudi Arabia’s economy, also supported by oil terminals on the Red Sea, is projected to grow by 2.1% this year, according to HSBC forecasts. Similarly, Oman’s stock index, reflecting its position outside the strait, has outperformed.
In contrast, economies of the UAE, Qatar, and Kuwait, which depend on the shipping canal, are expected to contract.
Salman Ahmed, Fidelity International’s global head of macro and strategic asset allocation, remarked that with peace negotiations threatened by renewed strikes, some degree of regional risk premium will persist, citing Iran’s strategic leverage over the strait.
On Wednesday, U.S. President Donald Trump declared that an interim peace agreement with Iran had collapsed following new Iranian attacks on U.S. bases in the Gulf.
S&P Global Ratings analysts warned that “a further confidence shock would exacerbate risk for companies exposed to consumer and service demand.”
### Resilience in Energy and Telecommunications
Oil and gas earnings are forecast to remain robust, as elevated energy prices offset lost volumes due to conflict-related damage and disruptions. HSBC has raised its Brent crude price forecast to $95 per barrel for 2026, estimating second-quarter average prices at $114.
While Saudi Arabia maintained exports through the Red Sea, the UAE’s gas sector suffered setbacks. ADNOC Gas anticipates approximately a 19% year-on-year decline in domestic gas sales linked to an incident at one of its plants.
Telecommunications operators such as Saudi Arabia’s STC and Mobily, along with the UAE’s e&, have demonstrated resilience throughout the conflict.
The consumer sector, including retail and tourism, has experienced disruption, though increased at-home consumption has provided some support. For instance, shares of Dubai-based food delivery firm Talabat have surged by over 60% in the last three months. Meanwhile, Gulf airline flight volumes have nearly returned to normal levels.
### Banks and Real Estate Face Challenges
Gulf banks are expected to report modest single-digit declines in second-quarter profits compared to the previous quarter, driven by reduced fee income from weaker trade finance and lower credit card spending on international travel, according to Elena Sanchez-Cabezudo, head of financials equity research at EFG Hermes.
This decline contrasts with strong performance in January and February, before the full impact of the conflict took hold in the second quarter. Sanchez-Cabezudo emphasized that lenders remain resilient with abundant liquidity.
S&P Global Ratings noted that regional banks have “stable funding profiles,” but ongoing war-related uncertainty is likely to slow their growth. Some UAE banks have attracted deposits by raising interest rates for new savers.
The UAE property market, after years of expansion, is showing signs of strain. Analysts have highlighted risks to expatriate inflows and tourism-related demand if regional tensions continue. Some developers are taking steps to preserve liquidity, including reducing or deferring dividend payments.
Citi reported that Dubai residential sales in the second quarter were “significantly below pre-conflict” levels, with Abu Dhabi seeing a similar but less pronounced decline. Major market players include Emaar Properties and Aldar Properties.
Francesc Balcells, CIO of EM debt at investment management firm FIM Partners, expressed cautious optimism. He acknowledged that although some real estate developers are lagging, regional credit spreads—reflecting investor risk premiums—have largely normalized. “It is just an issue of balance sheets; these companies have very strong balance sheets,” he said. “So they can withstand big shocks like this.”
(Exchange rate: $1 = 3.6724 UAE dirham)
Special Analysis by Omanet | Navigate Oman’s Market
The ongoing Iran conflict has created a mixed financial landscape across Gulf companies, with banks and real estate facing increased risks from inflation and weaker demand, while energy and telecom sectors show resilience due to elevated prices and contract stability. For businesses in Oman, relatively insulated from Strait of Hormuz disruptions, this translates into opportunities to capitalize on regional volatility and sector-specific strengths, but smart investors must vigilantly monitor geopolitical risks and sector liquidity to navigate uncertainty effectively.
