The war between Iran and the United States has caused an estimated $200 billion in physical damage to Gulf countries, according to Allianz Trade.
Economic losses across the region could reach four times that amount by 2030, the trade credit insurer warned in a study published on Wednesday. The research assesses the financial toll across the six member states of the Gulf Cooperation Council, where vital energy installations, civilian facilities and commercial trade routes have faced sustained disruption.
Allianz Trade, a subsidiary of the German financial services group Allianz SE that specialises in trade credit insurance and macroeconomic research, examined the damage sustained across Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman. The Gulf Cooperation Council is a regional intergovernmental union formed in 1981 to coordinate economic, security and political policy among Arab monarchies along the Persian Gulf.
Energy infrastructure damage
The regional escalation began in late February, when the United States and Israel launched military strikes against Iranian targets. Iran responded by shutting the Strait of Hormuz, a critical maritime passage connecting the Persian Gulf to the open ocean, and targeting neighbouring countries allied with Washington. Damage intensified in July after Houthi rebels in Yemen aligned with Iran entered the conflict.
The Houthis, a political and military movement controlling northern Yemen, have traded strikes on an almost daily basis with Saudi Arabia. Riyadh leads a regional military coalition backing the internationally recognised government of Yemen. Houthi forces have regularly claimed responsibility for attacks targeting Riyadh airport as well as key oil installations across the kingdom.
Allianz Trade noted that material losses across the region stood at slightly more than $200 billion, with the financial fallout falling most heavily on economies that rely on shipping through the Strait of Hormuz. More than 80 energy facilities have been hit during the fighting, predominantly in Kuwait, Qatar and Bahrain, with one third of those installations sustaining serious damage.
Long term economic cost
Beyond physical destruction, the conflict has weakened key non-energy industries, with tourism and commercial real estate facing significantly slower growth over the coming years. Allianz Trade projected that the total economic cost of the conflict for Gulf nations would reach $790 billion by 2030, representing a cumulative gross domestic product deficit of 5.9% compared with expectations before the war.
The insurer explained that this projection captures cumulative losses in economic output between 2026 and 2030. That figure measures the gap between what the six Gulf economies were on track to produce under growth trends before the war and the reduced output they are now forecast to deliver.
Shift in government spending
To offset the mounting losses, Gulf governments will need to increase domestic spending, Allianz Trade said. State priorities are expected to pivot away from ambitious development initiatives and major projects to focus instead on national resilience and urgent security needs. The report warned that this budgetary reallocation could lead to an explosion in sovereign debt across the region.
National expenditure dedicated to infrastructure and defence is projected to range between $380 billion and $400 billion by 2030. The wider economic contraction is already visible in the region's largest economy, with the International Monetary Fund projecting that Saudi Arabia's gross domestic product will contract by 3.3%.
Despite the ongoing conflict and restricted access through the Bab el-Mandeb strait due to Houthi naval operations, some sectors have shown short-term financial resilience. Saudi oil giant Aramco announced in early November that its third quarter net profit had increased by 34.6%, underscoring how elevated crude revenues continue to provide cash flow even as regional supply chains face persistent pressure.
