Iran's War Hits Gulf Economies

The war in the Middle East, has affected trading cities such as Dubai, Abu Dhabi, Doha and others. (Unsplash)

JAKARTA - The war between Iran and the United States and Israel is not only heating up the political situation in the Middle East. The conflict is also beginning to put pressure on the economies of the Gulf countries. Oil is disrupted, shipping routes are clogged, flights are canceled, and tourism is also hit. If the war drags on, the impact could be the worst for the region since the 1991 Gulf War.

In its report, Al Jazeera, quoted Tuesday, March 17, said Iran continued to attack Gulf countries since the conflict erupted on February 28. Tehran argued that the attack targeted US military bases. However, the Gulf countries rejected the reason and considered the attack to be unjustified.

The impact is most visible in the energy sector. Al Jazeera, citing Rystad Energy, reported that Middle East oil production fell from 21 million barrels to 14 million barrels per day in just over a week. If merchant ships continue to avoid the Strait of Hormuz due to Iranian threats, production could even fall to 6 million barrels per day. This is a serious problem, because the Strait of Hormuz is an important route for world energy supplies.

The most vulnerable countries are Qatar, Kuwait, and Bahrain. Referring to the same source, which quotes MEES analyst Yesar Al-Maleki, the three countries have limited export routes if they have to avoid the Strait of Hormuz. Goldman Sachs, still according to the same report, estimates that Qatar's and Kuwait's GDP could fall by 14 percent if the war lasts until the end of April. The UAE and Saudi Arabia are also under pressure, although the impact is slightly milder because both have alternative pipelines.

The pressure does not stop at oil and gas. Cirium, quoted from Al Jazeera, noted that 37,000 flights were canceled in the period from February 28 to March 8. Meanwhile, the World Travel & Tourism Council estimates that the region loses 600 million US dollars per day in foreign tourist spending.

For Indonesia, this turmoil must be watched and monitored. Because, every disturbance in the Gulf region usually affects energy prices, logistics costs, and global economic stability. When the Strait of Hormuz is shaken, the impact can spread to energy-importing countries such as Indonesia.