The Gulf states have demonstrated significant economic resilience under the strain of the United States’ and Israel’s war with Iran, maintaining essential public services and food security despite unprecedented disruptions to trade and critical infrastructure.
Strait of Hormuz Closures and Regional Supply Chains
The ongoing conflict has severely tested the economic absorptive capacity of Gulf Cooperation Council countries. The closure of the Strait of Hormuz choked both export and import supply chains, directly threatening hydrocarbon revenues, food security, and day-to-day business continuity across the region. Iranian military targeting also struck civilian and critical infrastructure.
Despite these shocks, electricity and water services experienced virtually no disruption. While missile and uncrewed aerial vehicle attacks targeted power-generation facilities in Bahrain, Kuwait, and the United Arab Emirates, power outages remained limited to Bahrain and Kuwait, while the UAE maintained uninterrupted electricity supplies. Desalinated water availability for households and firms remained stable throughout the region.
Adaptation Strategies by Gulf Businesses
Firms across the region shifted their logistics networks to bypass blocked maritime routes. Goods were successfully rerouted overland through ports along the Gulf of Oman and the Red Sea. Saudi Arabia and the UAE expanded their use of cargo trains, while Bahrain and Kuwait mobilized overland transportation links with Saudi Arabia. Air freight also served as a key strategy to mitigate supply-chain disruptions.
To preserve operations amid soaring operational costs, Gulf businesses implemented internal labor adjustments. Companies utilized unpaid annual leave and reduced salaries to avoid layoffs. However, these adaptation strategies remain short-term fixes. Absorbing heightened operational expenses and reduced operating scales is unsustainable for an extended period.
| Country / Region | Impacted Infrastructure | Observed Disruption | Mitigation Strategy |
|---|---|---|---|
| Bahrain | Power-generation facilities | Limited power outages | Overland links with Saudi Arabia |
| Kuwait | Power-generation facilities | Limited power outages | Overland links with Saudi Arabia |
| United Arab Emirates | Power-generation facilities | Uninterrupted electricity supply | Cargo train expansion and air freight |
| Saudi Arabia | Import/Export supply chains | Strait of Hormuz closure | Overland cargo trains and Red Sea ports |
Food Dependency and Long-Term Vulnerabilities
Although local markets avoided widespread food shortages through rapid logistical pivots, the conflict exposed the region’s deep structural dependency on imported food. The reliance on the Strait of Hormuz as a critical choke point leaves the Gulf vulnerable to severe food security risks if the conflict is prolonged.
