The energy crisis triggered by the war between the U.S., Israel and Iran is expected to fuel inflationary pressures in the global economy, while the economies of Gulf countries – key logistics hubs in global trade – are suffering serious damage from the conflict, according to an Anadolu Agency (AA) report released on Sunday.
This section of AA's special report series titled "The Toll of War in the Gulf" examines the impact of developments following U.S. and Israeli attacks on Iran, not only on regional economies but also on the global economy.
Asian countries stand out as the main export markets for Gulf nations such as the United Arab Emirates (UAE), Qatar, Bahrain, Kuwait, Saudi Arabia and Oman. Accordingly, the closure of the Strait of Hormuz poses a risk not only to the entire world but especially to Asia.
While this situation leads to significant revenue losses for Gulf countries, it also puts pressure on their production models, which rely heavily on foreign labor.
Since the war began, Dubai's real estate index has plunged by around 26%, while Qatar's has declined by about 7%. Meanwhile, Dubai's financial market index has dropped by roughly 15%.
Similarly, Saudi Arabia's stock market was down sharply at the onset of the war, and, although it has since partially recovered, it remains at lower levels. Significant declines have also been observed in the UAE and Qatar stock markets.
The region-driven energy crisis also poses risks for global inflation.
Gulf oil
Erhan Akkaş, an associate professor at the Economics Department of Ankara Social Sciences University, stated that the sharp decline in Dubai's real estate index indicates how negatively the city's economy will be affected by this process.
Noting that Kuwait, Oman and Bahrain have been similarly impacted, Akkaş said: "There are declines in the stock markets of Gulf countries. However, the UAE and Qatar appear to be much more affected."
"The UAE, in particular, is impacted by factors such as tourism, financial markets, trade and workers returning to their home countries," he added.
Akkaş emphasized that the Gulf is an energy-rich region dominated by oil and its derivatives, warning that the closure of the Strait of Hormuz or damage to energy infrastructure would expose countries to serious risks.
He added that problems in the energy sector have a "spillover effect," impacting even sectors not directly related to oil.
"Since the global economy is largely dependent on Gulf oil and natural gas, production costs rise across nearly all sectors, creating inflationary pressure worldwide," he noted.
Akkaş also recalled that before the oil era, Gulf exports were largely based on fishing, pearl diving and related economic activities, while imports were dominated by high-value-added industrial goods and consumer products.
He explained that precious stones and metals, such as gold, diamonds and jewelry, are among the most significant goods, especially in imports. These are followed by machinery and mechanical equipment, including industrial machines, turbines and production tools. Electrical equipment ranks third, with computers, phones, and other electronic devices leading this category. Finally, motor vehicles and spare parts are also among the most imported goods in Gulf countries.
Impact on Dubai
At the same time, Akkaş suggested that Dubai will be among the most affected locations, as re-exported goods are directly exposed to the crisis.
"The UAE, especially through Dubai Port, is a re-export hub. Dubai, one of the key centers of global maritime trade and logistics networks, faces the risk of losing this position," he said.
"Therefore, it is among the places that will be most directly affected."
"Re-export activities, maritime trade, and port-based sectors are facing serious challenges. Since oil and natural gas are fundamental inputs for nearly all sectors, any decline in production or disruption in logistics leads to interruptions across a wide range of industries, from automotive to packaging," he maintained.
Furthermore, Akkaş opined that significant issues arise in production processes where plastics and petroleum derivatives serve as raw materials, driving price increases and inflationary pressures.
"This is because oil and its derivatives are essential components in the production of many goods used today," he said.
White-collar workers may leave
Akkaş noted that such crises can affect nearly all sectors through spillover effects, emphasizing that Gulf economies rely heavily on foreign labor.
He explained that white-collar workers, especially in fields requiring expertise, management, and technical knowledge, such as engineering, are largely recruited from Western countries.
"They may return to their home countries or move to safer regions of the world to find work," he pointed out.
Higher prices
At the same time, analysts and executives at many financial institutions warn that prolonged war in the Middle East risks higher energy prices, which directly translate into higher consumer prices as oil and gas are key commodities widely used in production processes across industries.
First concerns related to higher prices and inflation came from leading global central banks, which in recent days decided to keep borrowing costs unchanged, or in some cases, like Australia, even deliver a small hike.
In a statement, the Reserve Bank of Australia (RBA) board said the conflict in the Middle East had resulted in "sharply higher fuel prices, which, if sustained, will add to inflation."