Industry News

Since April, the impact of the Middle East conflict on the Gulf region has shifted from initial social security turmoil to increasingly evident systemic economic pressures.

 

Despite the temporary extension of the ceasefire agreement, the risks of the waterway cannot be timely "covered" by international mechanisms, and the chain reaction between finance and the real economy has begun to manifest: oil prices remain high in high volatility, war risks and diversion costs rise, cash flow and supply guarantee at the operational level are under pressure, and the "security discount" of investors and enterprises is still increasing.

 

These challenges are transforming the "external shocks" of this round of conflict into internal growth pressures, livelihood cost pressures, and economic transformation pressures for Gulf countries.

 

External shocks evolve into endogenous risks

 

The Gulf countries are currently facing the transformation of channel risks into national security risks. The reporter felt that this change has clearly manifested in the streets and alleys during interviews in multiple places in the bay.

 

In the past, the night traffic on the Doha Coastal Avenue was constant, and restaurants were often difficult to find. Nowadays, during the war and conflict, the number of vehicles on the street has significantly decreased, the flow of customers in shopping malls has decreased, and the number of restaurant vacancies has increased; In Dubai and Abu Dhabi, people's travel frequency has also decreased, disrupting the previously stable and calm pace of life. The flow of people in Dubai malls has significantly decreased, and some luxury resort hotels have begun to close for rest; In Riyadh, Saudi Arabia, the outdoor main road screens, which were originally filled with commercial advertisements, have also begun to add official safety precautions and warning messages such as "no shooting of sensitive images".

 

Since April, the Saudi Ministry of Energy has officially announced the impact of this round of conflict on Saudi energy facilities, and the security and resilience of Gulf energy infrastructure have once again attracted high market attention. The flames of war may not only reach the edge of oil wells, but also under the faucet. Al Jazeera reported that the six Gulf countries produce about 40% of the world's desalinated water through over 400 seawater desalination plants, with a combined population of over 62 million and a high dependence on desalinated water; Qatar relies almost entirely on desalination for drinking water, while Bahrain relies over 90% on desalinated water for drinking water. Al Jazeera quoted researcher Nasser Said as saying that once the desalination facilities are damaged, it will pose significant risks to regional economic stability and growth.

 

Abdullah Dosali, the editor in chief of Kuwait's Arab newspaper, said that the Gulf countries are currently facing a real security dilemma of "dependence and anxiety coexisting". Their common point is that although a ceasefire is important, what is more important than a ceasefire is whether there is a credible security arrangement after the war.

 

Khalid Jabir, Executive Director of the Qatar Council for Global Affairs in the Middle East, pointed out that if the war becomes prolonged, the strategic ambiguity that Gulf countries used to rely on "hedging" will become increasingly difficult to maintain, and "flexibility" may be reinterpreted as "fragility".

 

Gulf countries cannot escape the dilemma of high oil prices

 

On the surface, the rise in oil prices seems to be beneficial for oil producing countries, but reporters learned from frontline interviews that Gulf countries are also suffering from the "high oil price crisis".

 

In the United Arab Emirates, due to the linkage between fuel prices and the international market, diesel and gasoline prices have significantly increased since April, and costs have quickly been transmitted to terminals through logistics, aviation, retail, and other links.

 

In a community supermarket in Dubai, the shelves are still packed, but the numbers on the price tags have quietly changed. The shop assistant said helplessly, "Recently, the purchase price has been rising, especially for imported fruits and daily necessities. We can only adjust the selling price accordingly

 

Shrada Mishra, an Indian housewife who has lived in the area for many years, told reporters that her family has recently suspended weekend gatherings and short trips. "Now we try not to go out, save on gas costs, and also try to cook at home to reduce expenses.

 

The pressure on the aviation and service industries is more direct. Airline detours, rising fuel prices, and disruptions to regional aviation hubs have significantly impacted the transit and tourism functions of cities such as Dubai, Abu Dhabi, and Doha.

 

The International Monetary Fund (IMF) recently released its World Economic Outlook report, lowering its economic growth expectations for Middle Eastern countries. Observers generally believe that Gulf countries have invested heavily in promoting economic diversification in recent years, with high expectations placed on tourism, logistics, exhibitions, and digital industries. However, the spillover of the war is putting additional costs and uncertainties on these new growth points.

 

Saad Al Kabi, CEO of Qatar Energy Company, bluntly stated that the financial and economic impact of this conflict could set back the process of regional economic diversification by 10 to 20 years.

 

For the Gulf economy, the real challenge is not temporary panic, but the gradual accumulation of war risks, diversion fees, raw material costs, and financing costs, ultimately eroding corporate profits, consumer and investment confidence. The regional competitive advantage that was originally formed based on "stability," "openness," and "predictability" is now facing severe tests.

 

(Reporter Wang Qiangwen, New Year Xia Xiao, Yin Jiong, Luo Chen)

 

(Editor in charge: He Xin)