Middle East
Gulf states signal investment review as Iran conflict strains budgets
The economic fallout from the US-Israeli campaign against Iran is placing severe strain on the budgets of Gulf nations.
The region’s leading economies have initiated a review of their overseas investment commitments and contractual obligations to mitigate the escalating financial burden.
As stated to the Financial Times, a Gulf official indicated that the scope of this review is broad, encompassing everything from capital commitments to foreign states and corporations to sports sponsorships, service contracts, and asset divestitures.
The official noted that Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar are collectively assessing the pressure on their national budgets and economies, though they declined to name specific participants in the talks.
“A number of Gulf nations have launched internal assessments to determine whether force majeure clauses can be invoked in existing contracts. Simultaneously, both current and future investment commitments are under review. The objective is to alleviate some of the economic pressures anticipated from the ongoing war,” the official said, adding that these measures will gain further significance if the war—and its associated expenditures—continues at the current intensity.
Energy revenues slump as defense spending surges
According to the official, these preemptive measures are a direct response to mounting budgetary strain.
Fiscal balances in the Gulf are being tested by a combination of declining energy revenues—driven by slowing production and logistical disruptions—as well as downturns in the tourism and aviation sectors, compounded by a sharp rise in defense spending.
A separate official, serving as an advisor to a Gulf government, indicated that the prospect of these wealthy nations reviewing their investments has drawn the attention of the White House.
Saudi Arabia, the United Arab Emirates, and Qatar manage among the largest and most active sovereign wealth funds globally. Following a visit to the region by US President Donald Trump last year, these nations had pledged hundreds of billions of dollars in investment into the US.
Gulf states are also major financiers of global sporting events. Domestically, these nations have been executing large-scale investments to diversify their economies and accelerate development.
Investment shifts may increase pressure on Washington
Moves that could impact investments in the US or other Western nations are viewed as a potential lever to increase pressure on President Trump to seek a diplomatic resolution to end the war.
The oil-rich Gulf nations are indirectly involved in the war initiated by the US and Israel against Iran. In response, the Tehran administration has struck back hard against Washington’s regional allies.
Following the outbreak of hostilities, maritime traffic through the Strait of Hormuz—the conduit for approximately 20% of global oil and natural gas shipments—has largely ceased. At least 10 oil tankers have been reported attacked in the Gulf.
Qatar, the world’s second-largest producer of liquefied natural gas (LNG), was forced to declare force majeure this week after suspending production following a drone strike on its primary LNG facility. One of Saudi Arabia’s largest oil refineries was also targeted.
Infrastructure and diplomatic sites struck in the Gulf
Iran has also targeted US military bases and embassies in the region, in addition to airports, hotels, and residential buildings, causing significant disruption to air traffic and tourism.
Before the war began, Gulf nations had urged the Trump administration to avoid striking Iran and to seek a diplomatic solution. However, these nations have borne the brunt of Iran’s retaliation.
Khalaf Al Habtoor, a prominent business leader in the United Arab Emirates, expressed the growing frustration in the region via social media in a direct address to President Trump:
“A direct question: Who gave you the authority to drag our region into a war with Iran? On what basis did you make this dangerous decision? Before pulling the trigger, did you calculate the consequences?”
Al Habtoor recalled that Gulf nations have been cited as primary financiers for President Trump’s plan for the reconstruction of Gaza and were expected to support broader initiatives dubbed the “Peace Committee.”
Noting that Gulf nations have contributed billions of dollars to support stability and development, Al Habtoor added, “Today, these nations have the right to ask: Where did this money go? Are we financing peace initiatives, or a war that puts us in danger?”
These developments may have significant consequences not only for the economy but also for the regional security architecture. Reports are mounting that the bond of trust between Washington and the Gulf states has been weakened by the war.
An analysis published in Foreign Policy suggests that Iran’s attacks could fundamentally fracture the security relationship between the US and the Gulf.
FP: “The US could lose the Gulf”
In an analysis titled “The US Could Lose the Gulf,” authored by George Washington University professor Marc Lynch, it is argued that Iran’s attacks on Gulf nations could radically alter regional security dynamics.
According to the analysis, Iran’s targeting of the United Arab Emirates, Bahrain, and other Gulf states has effectively ended the diplomatic rapprochement between Saudi Arabia and Iran established in recent years.
The analysis states that Iran’s strategy is not limited to military retaliation; it is also designed to create regional and global economic pressure by exposing the vulnerability of Gulf states.
According to Lynch, Tehran aims to exhaust Gulf and US air defense systems with low-cost drones and missiles, while simultaneously seeking to create severe volatility in global energy markets by exerting pressure on the Strait of Hormuz.
Another point highlighted in the analysis is the erosion of Gulf confidence in the US. While the regional security architecture has long relied on security guarantees provided by Washington against Iran, the recent attacks have severely shaken this premise.
According to Lynch, Gulf administrations hold the view that the war initiated by the US and Israel against Iran was launched without adequate consultation, despite the fact that it directly impacts their national interests.
The failure of the US to provide effective protection against Iran’s attacks on oil facilities, ports, and energy infrastructure has deepened the loss of trust in the region. The analysis also draws attention to concerns that Gulf nations are rapidly depleting their stocks of interceptor missiles, with the US unable to replenish this capacity in the short term.
This situation has led to the US military presence—long viewed as a security guarantee—being regarded in some Gulf capitals as a source of potential risk rather than a security asset.
According to the analysis, Iran’s attacks have severely eroded the belief among Gulf states that Washington will protect them during regional crises.
Middle East
US lifts naval blockade of Iran after ceasefire memorandum signed
The United States has lifted its naval blockade of Iran on the orders of President Donald Trump, ending restrictions on vessels entering and leaving Iranian ports.
Announcing the development, the US Central Command (CENTCOM) said the US military was no longer blocking maritime traffic to Iranian ports and had halted all operations related to enforcing the naval blockade.
The statement added that US warships would remain in the region to monitor compliance with the terms of the agreement.
The decision to lift the blockade follows the memorandum of understanding signed by the United States and Iran on June 18, aimed at ending the war and reopening the Strait of Hormuz to maritime traffic.
After signing the document in France, where he was attending the G7 summit, Trump sent the agreement to Iranian President Masoud Pezeshkian for approval.
In a statement, Iran’s Foreign Ministry said a formal signing ceremony between the two delegations, previously scheduled to take place in Geneva on June 19, would no longer be held.
Negotiations to continue in Switzerland
According to Axios, citing sources familiar with the matter, the signing process for the memorandum of understanding was accelerated in order to reopen the Strait of Hormuz to shipping as quickly as possible.
A planned meeting between US and Iranian representatives in Switzerland has not been cancelled. The talks are expected to focus on launching negotiations over Iran’s nuclear programme, with US Vice President James David Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf set to take part.
According to CNN, the 14-point memorandum calls for an immediate ceasefire on all fronts, the lifting of the naval blockade, the resumption of maritime traffic through the Strait of Hormuz, the removal of oil sanctions on Iran and the withdrawal of US troops from areas surrounding Iran.
The agreement also includes the allocation of $300 billion for Iran’s economic reconstruction, the release of $24 billion in frozen Iranian assets and a 60-day negotiation process aimed at reaching a final agreement on the nuclear programme.
In return, the authorities in Tehran pledged not to develop nuclear weapons.
Middle East
US conducts covert ship-to-ship oil transfers in Strait of Hormuz, sources say
The United States is conducting a covert operation in the Strait of Hormuz to ensure the uninterrupted flow of oil shipments from the Persian Gulf, according to reports.
The US Armed Forces are secretly escorting tankers and conducting ship-to-ship oil transfers using unmanned aerial vehicles (UAVs), unmanned surface vessels, and helicopters, Reuters reported, citing sources and satellite imagery.
At least 92 cargo vessels have participated in the process since the launch of the operation, the report said.
Sources stated that the plan is executed entirely and continuously under the control of the US military. According to the disclosed details, tankers arrive at a designated assembly point before reaching the Strait of Hormuz.
From there, they depart at staggered times, maintaining a distance of approximately 3 to 4 kilometers from one another. During the transit, the tankers switch off their transponders and extinguish their lights.
The US Armed Forces track the progress of the tankers via pre-determined routing points.
Once the tankers pass through the Strait of Hormuz and arrive just outside the zone that Iran has declared under its own control, they pull alongside receiving vessels to begin the oil transfer.
This transfer process reportedly lasts between 24 and 40 hours, after which the emptied tankers return back through the strait. Reuters noted that this method resembles the scheme used by Iran to bypass sanctions.
Oil transfers conducted in two distinct areas
Sources familiar with the process reported that the ship-to-ship oil transfers began in the early days of May and are being carried out in two distinct locations.
One of these points is located off the coast of Fujairah in the United Arab Emirates (UAE), while the other is near the Port of Sohar in Oman.
Reuters reported that satellite imagery dated June 11 detected 17 pairs of vessels simultaneously conducting oil transfers across both areas.
Sources claimed that a US Air Force Apache-type helicopter, which was shot down by Iran on the evening of June 8 and triggered retaliatory strikes by Washington, was also involved in this covert mission.
Satellite imagery captured on the day of the incident showed six pairs of tankers positioned side-by-side off the coast of Sohar. When asked for comment on the matter, the US Department of Defense (Pentagon) maintained that assets of the US Central Command (CENTCOM) are in no way involved in activities providing protection to ship-to-ship oil transfer operations on the high seas.
According to shipping documents reviewed by Reuters, a significant portion of the oil transported in the operation consists of exports originating from the UAE.
Sources added that the Kuwait Oil Tanker Company, a firm owned by the Kuwaiti state, is also actively participating in these transfers.
The UAE government, the UAE state oil company ADNOC, and the Kuwait Oil Tanker Company have not yet made any statements regarding the matter.
In a report published on June 3, Bloomberg also wrote that after Washington suspended its initiative dubbed “Project Freedom,” which envisioned escorting vessels through the Strait of Hormuz, the US Navy continued to quietly assist the transit of ships through the strait while trying not to publicize these activities.
The Iran-based Mehr news agency announced on June 10 that the Islamic Revolutionary Guard Corps had shot down a US MQ-9 Reaper-type unmanned aerial vehicle in the skies over the Iranian city of Jam.
On the evening of the same day, US President Donald Trump announced that he was preparing to resume bombardments against Iran due to insufficient progress in negotiations and the downing of the Apache helicopter off the coast of Oman on the evening of June 8.
CENTCOM announced on June 11 that the US military, acting on the instructions of President Donald Trump, had begun conducting “additional self-defense strikes” against certain targets in Iran.
Washington later desisted from launching new strikes, and Trump announced on June 15 that a peace agreement had been signed between the US and Iran.
Trump declared that the Strait of Hormuz was already partially open to maritime traffic and would be fully opened on June 19.
Middle East
Mine clearing in Strait of Hormuz could delay shipping traffic for up to 50 days
Clearing mines from the Strait of Hormuz to restore safe transit could delay the return of normal maritime traffic by several weeks, even after an agreement is reached to reopen the strategic waterway.
Security risks in the region persist, according to a report by the Reuters news agency, which cited shipping and maritime security sources.
Estimates from five Western sources operating in maritime security suggest that the clearance operation, which will utilize traditional minesweepers and underwater drones, could take 40 to 50 days to complete. Sources stated that this process must be concluded before insurance, shipping, and oil companies will be willing to risk transiting the strait.
The projected delay could impact global markets at a time when oil inventories in the world’s largest economies have fallen to their lowest levels since 2003. Based on pre-war shipment volumes, estimates suggest that tens of millions of additional barrels of oil could remain trapped in the strait, adding to the Persian Gulf shipments that have been blocked since February 28.
Jakob Larsen, the head of maritime safety and security at the shipping association BIMCO, called for caution regarding the situation:
“At this stage, we believe it is still too risky to begin transits. The mine hazard in the region remains a problem both now and for the future; therefore, safe, de-mined routes must be established.”
The report noted that the exact number of mines laid by Iran remains unknown in the strait, which accounted for 20% of global daily oil and natural gas shipments before the war. A June 11 briefing note from the German Navy, citing data from US and British naval forces, stated that the mines were located in four areas around the strait, though Germany noted it could not independently verify these locations.
The mere possibility of mines is highlighted as enough to keep shipping companies away from the region. Because a supertanker carrying crude oil can be valued at approximately $300 million, war-risk insurers, oil companies, and tanker operators are expected to demand guarantees of safe passage.
Rene Kofod-Olsen, CEO of V.Group—one of the world’s largest technical ship and crew management companies, which has 13 vessels stranded in the Persian Gulf—evaluated the situation:
“Even a single naval mine is enough to cause loss of life. This is clearly a massive problem for the global shipping industry.”
Arsenio Dominguez, Secretary-General of the UN’s International Maritime Organization, welcomed the agreement to reopen the Strait of Hormuz, calling it “an important step toward restoring security in this vital corridor for seafarers and ships.” However, Dominguez added that “implementation will take time to ensure all necessary security and safety guarantees are met.”
Earlier, US President Donald Trump announced that an agreement had been signed with Iran, that the Strait of Hormuz was partially opened to maritime traffic, and that it would be fully opened as of June 19.
Trump claimed that, at the current stage, “a search is being conducted for a few mines.”
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