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2026 GDP Growth Forecast (GCC Region)
Comparison of World Bank GDP growth projections before and after the conflict escalation.
Primary Sources
The World Loses Petrodollar Stimulus as Iran War Drains Gulf Wealth
The World Loses Petrodollar Stimulus as Iran War Drains Gulf Wealth In normal times, Gulf states sell oil and gas, spending some of the proceeds at home while investing the surplus abroad.
Iran War Disrupts Hormuz Oil Flow and Raises Questions Over Petrodollar ...
Home / REGIONS / Americas / Iran War Disrupts Hormuz Oil Flow and Raises Questions Over Petrodollar Dominance The ongoing conflict involving Iran and disruptions in the Strait of Hormuz are placing growing strain on the global oil trading system, which has long been dominated by the United States dollar. The Strait of Hormuz is one of the world’s most important energy corridors, with a significant share of global crude oil shipments passing through it. Since the escalation of the conflict, roughly one fifth of Gulf oil flows have been disrupted, affecting import dependent economies, especially in Asia. As tensions continue, major oil importers are increasingly turning to direct and less transparent supply arrangements with Gulf producers and regional intermediaries to maintain access to energy supplies. Rising Use of Opaque Oil Trade Routes Reports indicate that oil shipments are increasingly moving through informal or indirect channels, including arrangements that involve reduced tracking visibility and alternative settlement structures. Some tankers have reportedly crossed the Strait of Hormuz with tracking systems turned off, reflecting heightened security concerns and efforts to avoid geopolitical interference. These developments suggest a shift away from traditional open market oil trading toward more politically negotiated supply routes. Shift Toward Bilateral Energy Deals Countries heavily dependent on Gulf oil, including major Asian economies, are expanding bilateral agreements with producers in the Middle East to secure long term supply stability. These arrangements often involve state to state negotiations rather than open market transactions, allowing buyers to reduce exposure to price volatility and transit risks. There are also indications that some agreements may involve non dollar settlement mechanisms or barter style exchanges, although most global oil trade still relies heavily on established pricing benchmarks. Pressure on the Petrodollar System The traditional global oil trading system has long relied on the dominance of the US dollar, often referred to as the petrodollar system. However, current disruptions are accelerating discussions about alternative payment structures. Some emerging economies have already begun experimenting with local currency settlements in energy trade. For example, India and the United Arab Emirates have previously agreed to use alternative currencies for certain bilateral transactions. While these changes rema...
Iran War Disrupts Hormuz Oil Flow and Raises Questions Over Petrodollar ...
The ongoing conflict involving Iran and disruptions in the Strait of Hormuz are placing growing strain on the global oil trading system, which has long been dominated by the United States dollar. The Strait of Hormuz is one of the world’s most important energy corridors, with a significant share of global crude oil shipments passing through it. Since the escalation of the conflict, roughly one fifth of Gulf oil flows have been disrupted, affecting import dependent economies, especially in Asia. As tensions continue, major oil importers are increasingly turning to direct and less transparent supply arrangements with Gulf producers and regional intermediaries to maintain access to energy supplies. Rising Use of Opaque Oil Trade Routes Reports indicate that oil shipments are increasingly moving through informal or indirect channels, including arrangements that involve reduced tracking visibility and alternative settlement structures. Some tankers have reportedly crossed the Strait of Hormuz with tracking systems turned off, reflecting heightened security concerns and efforts to avoid geopolitical interference. These developments suggest a shift away from traditional open market oil trading toward more politically negotiated supply routes. Shift Toward Bilateral Energy Deals Countries heavily dependent on Gulf oil, including major Asian economies, are expanding bilateral agreements with producers in the Middle East to secure long term supply stability. These arrangements often involve state to state negotiations rather than open market transactions, allowing buyers to reduce exposure to price volatility and transit risks. There are also indications that some agreements may involve non dollar settlement mechanisms or barter style exchanges, although most global oil trade still relies heavily on established pricing benchmarks. Pressure on the Petrodollar System The traditional global oil trading system has long relied on the dominance of the US dollar, often referred to as the petrodollar system. However, current disruptions are accelerating discussions about alternative payment structures. Some emerging economies have already begun experimenting with local currency settlements in energy trade. For example, India and the United Arab Emirates have previously agreed to use alternative currencies for certain bilateral transactions. While these changes remain limited in scale, analysts suggest that continued instability in key shipping routes could enc...
Iran War Economic Impact: Gulf States Count the Cost
By Emilie Rutledge, The Open University (The Conversation) – The US and Israel’s war on Iran has cast a long shadow over the Gulf. It has placed many of the economies that make up the Gulf Cooperation Council (GCC) regional grouping – Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates (UAE) and Saudi Arabia – under substantial strain. Since the war began in February, the World Bank has downgraded its 2026 GDP growth forecast for the region from 4.4% to just 1.3%. Some thinktanks, including Oxford Economics, even predict that some GCC economies will enter recession in the second half of the year. However, the effects of the war have differed across the region. While the Gulf states are often viewed as a unified economic bloc bound by a shared dependence on hydrocarbons, the conflict has revealed significant differences in their economic vulnerability and resilience. Countries like Qatar and Kuwait have seen their oil and gas exports seriously disrupted by the effective closure of the Strait of Hormuz. But Saudi Arabia and the UAE, which have access to bypass infrastructure, have been partly able to circumvent this limitation. Saudi Arabia has diverted 7 million barrels of crude per day through its east-west pipeline, allowing it to export oil from Yanbu on the Red Sea. The UAE, meanwhile, has utilised a pipeline from Habshan to Fujairah to export up to 1.8 million barrels of oil each day from the Gulf of Oman. This infrastructure has enabled both countries to capitalise on soaring global oil prices. Saudi Aramco, Saudi Arabia’s state oil company, reported a 26% jump in profits in the first quarter of 2026. Disruption to energy exports is one part of the story. The war has also caused substantial physical damage to energy infrastructure across the region. Around 80 energy facilities, ranging from production plants to refineries and pipelines, have been targeted by Iranian missile and drone attacks so far. It will take months – and in some cases years – to repair the damage (which stands at an estimated US$58 billion) once the war ends. Qatar’s liquified natural gas industry, in particular, has suffered serious damage. QatarEnergy, the state-owned energy company, says it will take up to five years to repair its Ras Laffan industrial hub alone. Gulf diversification The GCC states have adopted strategies to diversify their economies away from a dependency on hydrocarbons. Tourism and aviation are two central pillars of this, with GCC countries investing hea...
