The Gulf hospitality sector is expected to begin recovering in the fourth quarter of 2026 as geopolitical tensions ease, although hotel occupancy is unlikely to return to pre-war levels before the end of 2027, according to S&P Global Ratings.
Corporate profitability across the Gulf Cooperation Council (GCC) is expected to come under pressure through the end of 2026 as the prolonged Middle East conflict drives up logistics costs, weakens business confidence and delays investment, according to a new report by S&P Global Ratings.
The risk of the US-Iran conflict escalating into a broader regional war intensified on Monday after the United States carried out a ninth consecutive night of strikes on Iranian targets, prompting fresh missile attacks by Tehran and raising fears that diplomacy may be losing ground to military confrontation.
Iran launched renewed attacks on US Gulf allies on Saturday after the United States completed a seventh consecutive night of strikes targeting Iranian military infrastructure, marking a sharp escalation one week after a fragile ceasefire collapsed, said media reports.
GCC fixed-income yields are benefitting from a decline in geopolitical risk premiums following the US-Iran deal, according to Fitch Ratings. This is reflected in yield spreads between GCC investment-grade debt and US Treasury bonds having returned to pre-war levels.
The interim agreement between the US and Iran aimed at ending the Middle East conflict is expected to pave the way for Iran to resume oil exports immediately, according to US officials.
The United States and Iran have signed a preliminary agreement aimed at ending months of conflict and paving the way for the reopening of the Strait of Hormuz, sanctions relief for Tehran and a new round of negotiations on Iran's nuclear programme.
The Asian Development Bank (ADB) is acting quickly and decisively with $4 billion in financing to help countries withstand the impact of the Middle East conflict, including about $3 billion requested by governments and $1 billion provided as trade finance for energy and food imports.
The United States launched a new round of strikes on military targets across Iran overnight, prompting retaliatory missile and drone attacks by Tehran against US bases in Bahrain, Kuwait and Jordan and renewed threats to shut the Strait of Hormuz. The latest exchanges have heightened concerns that the conflict could again hit life in the Gulf.
Iran is expected to respond on Thursday to a US proposal aimed at ending the conflict and establishing a framework for broader nuclear negotiations, according to media reports, as diplomatic efforts intensified amid continuing tensions in the Gulf.
