This is an excerpt of the Reuters Gulf Currents newsletter, which is published every Wednesday. Sign up here to receive a weekly breakdown of the geopolitical and financial forces reshaping a region at a crossroads. Additionally, get the Reuters Iran Briefing for latest coverage from the war.
It’s hard to grasp how abruptly life in the Gulf has been upended in just five days of war.
Members of the Reuters Gulf team, like so many of our neighbours in the region, have huddled in stairwells and windowless bathrooms, listening to volleys of missiles being intercepted above our homes while trying to soothe frightened kids and field messages of concern from abroad.
We’ve become newly alert to where a window might blow in, how to track down difficult-to-find supplies of basics like chicken or bananas and how every rumble – even a neighbour closing a cupboard – can send the heart racing.
Across a region whose newly treacherous airspace is closed and where the only viable escape route is a long cross-desert drive through territory under Iranian attack, we’re all weighing the same impossible questions: stay or go, and how?
Federico Maccioni, a member of our finance team in Dubai, said that for the first time he perceived a hint of doubt about what lies ahead for the city. Still, Rachna Uppal, our Abu Dhabi-based chief economics correspondent, said she was struck by how normal life continued, with people shopping, attending dental appointments and even jetskiing.
Meanwhile, as reporters, we’re stretched across the Gulf to make sense of it all. This week in Gulf Currents, Iran’s drones are proving relentless – punching through Gulf defences and striking airports, hotels and data centres. Tourism is buckling, business hubs are paralysed and decades of Gulf state-building are suddenly in doubt. Our briefing unpacks the economic shock, the strategic stakes and what this war may change forever. For more, read our responses to audience questions about the Iran war.
WAR TESTS GULF FUNDAMENTALS
For decades, the Gulf’s rise rested on two core assumptions: that its cities offered safe haven in an unstable region and that vast wealth from uninterrupted energy exports would keep flowing. This week’s events have shaken both pillars at once – perhaps irreversibly.
First to falter was the idea of the Gulf as a sanctuary insulated from the region’s violence. Dubai, the flagship embodiment of that promise, was built on the premise that turmoil stopped at its borders. But days of Iranian missile and drone strikes on airports, ports and luxury landmarks punctured that carefully constructed brand.
UAE President Sheikh Mohammed bin Zayed tried to project business-as-usual as he strolled through Dubai Mall on Monday evening, yet outside, flights were grounded, financial markets shut and jumpy residents queued for supplies all while deep thuds rolled through the skyscrapers as air defences intercepted barrage after barrage.
The psychological blow raises doubts about whether cities like Dubai, Abu Dhabi and Riyadh - the success of which has been built on confidence, mobility and positive perceptions - can maintain premium appeal when they suddenly prove vulnerable to regional turmoil.
ECONOMIC RUPTURE AND FRAGILITY
The second rupture is economic, and deeper still.
The closure of the Strait of Hormuz and the shutdown of QatarEnergy’s vast LNG operations – supplier of a fifth of global LNG and long proud of never missing a shipment – have unleashed a supply shock once considered inconceivable. Iraq has slashed production; Saudi Arabia is rerouting crude; hundreds of tankers sit idle near the port of Fujairah, which is still burning after an attack, without safe passage. Prices for oil, gas and related commodities have surged.
The Gulf’s ability to bankroll diversification, mega-investments and generous social contracts depends on secure energy exports. That assumption is suddenly fragile.
Some of this damage cannot be undone.
FUTURE OF IRAN-GULF RELATIONS
But this war has unlocked a larger unknown: what will relations between the Arab Gulf and Iran look like after this?
After years of tentative détente, Gulf Arab states had begun recalibrating ties with Iran, acknowledging geography and mutual interest. That fragile trust has now been ruptured. The scale of Iran’s attacks – striking civilian targets in six U.S.-aligned states – has erased the political space Gulf leaders had carved out for dialogue. Having been attacked directly, Gulf capitals must now confront a harder question: even if the fighting stops, can trust in Iran as a neighbour ever be rebuilt – or has the relationship entered a long, hostile freeze?
The implications are profound. The Gulf’s economic model, energy security and regional diplomacy – long treated as constants – have all been destabilised. Even if the fighting stops soon, the era of hedging with Iran is over. And a more guarded, security-driven Gulf lies ahead.
