For decades, Gulf Cooperation Council (GCC) states invested trillions of dollars to transform their oil-dependent economies into diversified global hubs.
Today, those projects are seriously threatened.
Caught between a war waged by the United States and Israel against Iran and Tehran’s asymmetric retaliation, the Gulf is paying a high price for its geography.
Salem Al-Jahouri, a journalist and researcher, told Al Jazeera Arabic that the GCC is “between the hammer and the anvil.”
This geopolitical restriction has generated deep political upheavals.
Qatari Prime Minister Sheikh Mohammed bin Abdulrahman bin Jassim Al Thani described the unprovoked Iranian attacks as a “betrayal,” noting that the attacks on the Gulf States began an hour after the start of the war, despite their active diplomatic efforts to prevent the conflict.
Ultimately, these attacks leave Gulf capitals facing the economic consequences of a war they neither started nor supported, having pushed wholeheartedly for a diplomatic resolution that the United States and Israel torpedoed on February 28.
The cost of a closed bottleneck
The most immediate shock is the virtual closure of the vital global artery, the Strait of Hormuz, which normally handles 20 million barrels per day (bpd) of oil, about 20 percent of the world’s maritime oil trade. Export volumes have plummeted to less than 10 percent of pre-conflict levels.
This blockade has caused serious obstacles, with Iraq being the most affected, as it only has a crude oil storage capacity for six days.
Al Jazeera correspondent Samer Alkubaisi reported from Basra that Iraq’s limited storage has reached maximum capacity, forcing production to be cut from 3.3 million bpd to 1.3 million. Iraqi Oil Ministry sources are now desperately seeking alternative outlets, including using Omani ports for strategic storage.
To legally protect their unfulfilled global energy contracts, states such as Qatar and Kuwait have declared “force majeure,” according to Abdullah Bandar Al-Otaibi, an assistant professor at Qatar University.
To mitigate these disruptions, there is an urgent need for floating storage, says Mohammed Al-Sabban, former senior advisor to the Saudi oil minister. Although Saudi Arabia can rely on its 1,200-kilometer (746-mile) East-West pipeline to bypass Hormuz, most other Gulf nations lack such alternatives, he noted. Saudi Aramco CEO Amin Nasser warned that continued disruptions will have “catastrophic consequences” for global oil markets.
Specific infrastructure and daily losses
While Washington focuses on degrading Iranian military capabilities, Iran is waging a war aimed at the global economy, which the United States dominates and from which Israel benefits greatly, and Gulf infrastructure.
The Qatari prime minister explained that Iranian attacks on his country are distributed among energy facilities (40 percent), military sites (35 percent) and civil infrastructure such as drinking water tanks (25 percent). “What are American interests in Qatar’s drinking water?” the prime minister asked. Al-Otaibi said this systematically undermines Tehran’s narrative that it differentiates between military and civilian targets.
Saleh Al-Mutairi, director of the Madar Center for Policy Studies, explained that expanding targets to Gulf economic facilities is a calculated pressure tactic aimed at forcing the United States and Israel to accelerate the end of the war.
The aviation and tourism sectors are also bleeding capital. The GCC is a major global transit hub, typically handling up to 360 million passengers a year between Doha, Abu Dhabi and Dubai. The unprecedented airspace closures have resulted in the cancellation of approximately 40,000 flights, severing the Gulf’s connection to the global economy and leaving citizens stranded abroad.
The asymmetric cost of defense
As missiles rain down, the financial burden of actively defending Gulf airspace has revealed a staggering asymmetry.
Iran’s estimated expenditure for its attacks ranges between $194 million and $391 million. These are largely Shahed drones, which the Center for Strategic and International Studies (CSIS) estimates cost between $20,000 and $50,000 per unit.
In stark contrast, Gulf states are deploying expensive interceptor systems like the Patriot PAC-3. According to the Missile Defense Advocacy Alliance, a single PAC-3 MSE interceptor costs between $3 million and $5 million.
The resulting financial cost is monumental. Defense estimates suggest that the UAE’s total spending on air defense has reached between $1.31 billion and $2.61 billion, up to 13 times the amount Iran spent launching the strikes.
Kuwait is estimated to have spent between $800 million and $1.5 billion defending the Ali al-Salem air base, while Qatar’s interdiction operations have cost between $600 million and $900 million.
Bahrain and Jordan have also spent hundreds of millions neutralizing incoming threats. Each interceptor fired represents resources that cannot be replaced overnight, raising fears that defense reserves could be quickly depleted.
The global shockwave: a looming food crisis
The economic paralysis is also rapidly translating into a global agricultural crisis. The Gulf region exported $50 billion worth of nitrogen fertilizers between 2020 and 2025, and about 30 percent of global urea trade passes through the Strait of Hormuz.
Following the closure of Qatar’s gas facilities, QatarEnergy’s fertilizer division stopped urea production. The resulting supply shock caused Egyptian urea prices to soar 37 percent in just a few days, according to Hatem Ghandir, Al Jazeera Arabic economics editor.
Economists warn that these shortages will inflate the production costs of staple crops, risking a serious wave of food inflation in developing countries already struggling with debt.
Rebuild and reassess the future
As the conflict continues, GCC governments face the unquantified burden of repairing damaged infrastructure. However, the most profound impact of war may be strategic.
The crisis has exposed the limits of the implicit historic compromise between the United States and the Gulf: Gulf capital and energy security in exchange for an American defense umbrella.
With US interceptor inventories dwindling and regional economies taking direct hits, analysts note growing frustration in Gulf capitals over Washington’s unilateral escalation. As they manage the daily fallout from suspended flights and stagnating export revenues, the GCC is likely to aggressively reassess its security partnerships in a region where its geography remains its greatest vulnerability.
