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The joint US-Israeli military campaign against Iran, launched on 28 February under operations codenamed Epic Fury and Operation Roaring Lion, has pulled the GCC into the most destabilising regional confrontation in a generation.

Six days into the crisis, the scale of collateral damage to Gulf capitals is becoming fully visible in damaged infrastructure, grounded aircraft, shuttered ports, halted energy production and a darkening investment climate.

Every member of the GCC has absorbed Iranian missile or drone strikes, despite none having launched offensive operations against Tehran.

In contrast to the restrained signalling from Iran during the 12-day war in June 2025 – when it choreographed its Gulf retaliation to a single base in Qatar – this campaign represents a deliberate effort to punish the US and states harbouring its assets.

By 4 March, Iran had fired 186 ballistic missiles at the UAE alone, according to the UAE Ministry of Defence, with all but one intercepted, but with lethal debris falling across Abu Dhabi and Dubai. Of 812 drones launched toward the UAE, 57 made impact.

Across the Gulf, however, the overall damage tallied so far is stark, particularly at US military bases. Iranian volleys have been directed with special intensity at the US Navy’s 5th Fleet headquarters in Bahrain and the Al-Udeid airbase in Qatar, alongside every US airbase and associated radar and satellite communications system across the region.

Strangled logistics

The Strait of Hormuz – the 33-kilometre-wide channel between Iran and Oman – was also declared closed to traffic by the Islamic Revolutionary Guard Corps (IRGC) the same day the US-Israeli attacks began.

Closing the strait, through which approximately 20 million barrels of crude oil pass every day, has been a perennial Iranian threat, and now Tehran is making good on it.

The strait is the sole maritime exit for much of the energy exported from the Gulf states, making up around a fifth of all seaborne oil traded globally in total.

At least five vessels have been struck so far in enforcement of the blockade, but the real impediment to ships is now the withdrawal of war risk cover by insurance underwriters – leaving ships inside and outside of the strait stranded.

Oil prices have responded accordingly, with Brent crude rising above $80 a barrel – up from closer to $60 – and with analysts placing $100 a barrel firmly back on the table if the disruption runs for more than a few weeks.

LNG shutdown

If the Hormuz closure has convulsed oil markets, the direct attack on Qatar’s energy infrastructure has delivered a separate and arguably more structurally significant blow.

Iranian drones struck QatarEnergy’s facilities at both Ras Laffan Industrial City and Mesaieed Industrial City, forcing a complete halt to all liquefied natural gas (LNG) production and associated output.

Qatar, which operated 14 LNG trains with a combined annual capacity of 77 million tonnes – accounting for roughly 20% of global LNG trade – now operates none. Doha, incensed, has cut ties with Iran.

European benchmark gas futures meanwhile jumped almost 50% within hours of the announcement. Asian LNG spot prices rose by more than a third. Country-level squeezes have been even harder, with gas prices spiking by 93% in the UK, for example.

Qatari production had been filling the void left in Europe by its boycott of Russian gas, so its halting of production now places European energy stocks under significant stress. Asian buyers, including Bangladesh, India and Pakistan, will also be feeling the strain.

Regional trade risk

The same war risk exclusions that have grounded the tanker fleet apply with equal force to container shipping, bulk carriers and general cargo vessels – extending the disruption beyond energy into every category of goods that moves through Gulf ports.

And the ports themselves are also in jeopardy. Jebel Ali in Dubai – the region’s busiest port – was temporarily closed after fire broke out from debris falling from missile interceptions overhead. Other regional ports have also seen various suspensions.

The world’s major container carriers have also drawn their own conclusions. MSC, Maersk, Hapag-Lloyd and CMA CGM have all halted Hormuz crossings entirely.

Importers across the Gulf – a region that is overwhelmingly dependent on seaborne trade for food, consumer goods, construction materials and industrial inputs – face costly re-routing.

Vessels are discharging Gulf-bound containers at Salalah in Oman, Khor Fakkan, Sohar and Duqm, from where onward delivery might be arranged overland. Spot freight rates for Gulf-destined cargo are in turn rising sharply as feeder capacity is overwhelmed.

Travel under assault

The Gulf’s aviation hubs have also been brought to a relative standstill.

A drone strike on Dubai International, the busiest airport on earth for international travel, was the most dramatic incident, but several airports have been hit and sweeping airspace closures have grounded all but a handful of flights over the Gulf.

On the worst day so far, more than 1,500 flights to or from Middle Eastern destinations were cancelled. The broader long-haul linkage through the Gulf from Europe to Asia has also been severed, forcing international legs to reroute away from the Gulf corridor.

Drone and shrapnel strikes on luxury hospitality projects in the region have meanwhile dealt a heavy blow to the GCC’s touristic safe-haven status. The region’s busy meetings, incentives, conferences and exhibitions (MICE) calendar is in disarray.

Gulf tourism entered 2026 in a strong position. Regional travel bookings had reached close to $101bn – 23% above pre-pandemic levels. Luxury hotel occupancy across Dubai, Abu Dhabi, Doha and Riyadh had set successive records through the first two months of the year. That momentum has been destroyed inside of a week.

Tourism Economics projects a fall in Middle East travel arrivals of around 11% year-on-year even in an optimistic scenario where the conflict resolves within weeks – meaning 23 million fewer visitors and a $34bn contraction in tourism spending.

If the conflict runs for two months, the projected decline steepens to 27%, with up to 38 million lost arrivals and $56bn in foregone receipts.

Long-term risks

The IMF had projected GDP growth of about 4% across the six GCC economies in 2026, driven substantially by non-oil diversification and fuelled by sustained inflows of foreign capital, foreign talent and foreign visitors.

Each of those flows is now disrupted, and some portion of the disruption will outlast the immediate security situation. Businesses could also restructure themselves to mitigate for elevated scenario of future regional risk.

The GCC states find themselves in a position of extraordinary and largely undeserved exposure. They did not initiate this conflict, and several of them invested heavily in diplomatic outreach and mediation between concerned parties.

The region is nevertheless absorbing the consequences.

The preferred Gulf instruments of mediation, back-channel diplomacy and economic persuasion have been rendered irrelevant by the speed and scale of events.

The region’s airlines, ports, refineries, LNG complexes, hotels, conference centres, stock exchanges and carefully constructed global image are all paying a price set by decisions made elsewhere. And the bill is still running.

Investors will reassess, and the governments of the GCC now face the question of how to restore peace and order in a region being actively contested militarily by the US.

READ THE MARCH 2026 MEED BUSINESS REVIEW – click here to view PDF

Riyadh urges private sector to take greater role; Chemical players look to spend rationally; Economic uptick lends confidence to Cairo’s reforms.

Distributed to senior decision-makers in the region and around the world, the March 2026 edition of MEED Business Review includes: