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Gulf economies are facing significant challenges due to the ongoing Iran war and its impact on the Strait of Hormuz, which is a key passage for approximately 125 ships daily before the conflict. Currently, only about 7 to 15 ships pass through on average, disrupting shipping movements and increasing costs. Despite oil prices rising to around $118 per barrel, the losses resulting from export restrictions, higher transportation, and insurance costs have not been fully compensated. These conditions are leading to a slowdown in economic growth, with Qatar’s GDP decreasing by 7% in the first quarter. Additionally, the International Monetary Fund has lowered its growth forecast for Saudi Arabia to 1.7% in 2026, despite the country being among those least affected thanks to alternative export routes. Gulf countries are facing budget deficits, and their ability to finance these gaps varies, relying on instruments such as bonds and sovereign funds. There are also moves to prioritize spending and cut back on unnecessary projects. The continuation of the conflict threatens energy market stability and drives costs higher, emphasizing the need to diversify energy sources, develop alternative routes around the Strait of Hormuz, and improve resource management to achieve economic sustainability amid ongoing crises.
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