Gulf states could review investments due to financial strains caused by Iran war, FT reports
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The official added that the review was a precautionary step driven by “budgetary pressures” resulting from reduced energy income due to slower production or disrupted shipments and declines in tourism
(Reuters) – Gulf nations may begin reassessing their overseas investments and future commitments as they seek to relieve financial pressure on their budgets following the US-Israeli strikes on Iran, the Financial Times reported on Thursday.
A Gulf official told the newspaper that the ongoing conflict in the region could influence everything from investment agreements with foreign states or companies, to sports sponsorships, business contracts, and asset sales — particularly if the war and associated costs persist at their current pace.
Reuters has been unable to independently verify the report, and the FT did not identify the official or their position.
For decades, the Gulf’s prosperity has been built on two key assumptions: that its rapidly expanding cities would serve as a safe haven in an unstable region, and that immense wealth from consistent energy exports would continue to flow uninterrupted. However, recent events have shaken both of these assumptions simultaneously.
"A number of Gulf countries have initiated internal reviews to see whether force majeure clauses can be applied to current contracts, while also evaluating present and future investment commitments to ease the economic strain caused by the ongoing conflict," a Gulf official told the Financial Times. "This is particularly relevant if the war and related costs continue at the current rate."
The official added that the review was a precautionary step driven by “budgetary pressures” resulting from reduced energy income due to slower production or disrupted shipments, declines in tourism and aviation, and an increase in defense spending.
The FT wrote a government adviser in the Gulf also noted that the potential for an investment review by these wealthy states had caught the attention of the White House. The Gulf nations manage some of the largest sovereign wealth funds in the world. Saudi Arabia, the UAE, and Qatar pledged hundreds of billions of dollars in investments in the US last year following President Donald Trump's visit to the region.
These nations are also major supporters of global sporting events and have been investing heavily in domestic projects to diversify their economies and develop their infrastructure.
Any significant shift in their investment strategies, especially toward the US or other Western nations, could increase pressure on Trump to pursue diplomatic efforts to end the conflict.
The oil-rich Gulf states have been drawn into the conflict sparked by US and Israeli actions against Iran, with Tehran retaliating fiercely against Washington's regional allies. The war has caused disruptions to shipping in the Strait of Hormuz, a vital waterway through which a fifth of the world's oil and gas flows. At least 10 tankers have been struck in the Gulf.
Qatar, the world's second-largest producer of liquefied natural gas, declared force majeure this week after suspending production following a drone strike on its main LNG plant. Saudi Arabia’s large oil refinery was also targeted.
Iran has also attacked US military bases and embassies, as well as airports, hotels, and residential areas, severely disrupting air traffic and tourism.
Gulf nations had urged Trump to delay military action and pursue diplomatic negotiations with Iran, but they have since borne the brunt of Iran's retaliatory actions.
Khalaf al-Habtoor, a prominent Emirati businessman, voiced the region's frustrations over being dragged into a conflict sparked by the US and Israel, posting a direct question to Trump on social media.
"Who gave you the authority to drag our region into a war with #Iran?" he asked on X. "And on what grounds did you make this dangerous decision? Did you calculate the collateral damage before pulling the trigger?"
He emphasized that Gulf countries were expected to be major contributors to Trump’s plan to rebuild Gaza and to support his broader "Board of Peace" initiative.
"Arab Gulf nations have contributed billions of dollars to support stability and development," he said. "Today, these countries have the right to ask: Where did this money go? Are we funding peace initiatives or financing a war that puts us in danger?"
