Gulf states warn renewed U.S.-Iran conflict could deepen energy and investment risks

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Gulf states warn on U.S.-Iran risks

Highlights

Senior Middle East diplomats, including Egypt's foreign minister, warn that renewed U.S.-Iran conflict would be more destructive and risk deeper regional instability.
Qatar is mediating urgent talks between U.S. and Iranian officials in Doha ahead of U.S. midterm elections, highlighting persistent diplomatic gaps and escalation risks.
Continued missile and drone attacks on Gulf infrastructure, shipping disruptions in the Strait of Hormuz, and Iran's threats of wider retaliation erode investor confidence and energy market stability.

Diplomatic warnings and mediation efforts

As reported by Financial Times, senior Middle East diplomats are warning that any renewed military escalation between the U.S. and Iran threatens broader damage across the region, after earlier rounds of conflict disrupted energy markets and regional stability.

Egyptian foreign minister Badr Abdelatty says he is "extremely worried" and warns that a second round would be more dangerous and more destructive. Speaking at the IISS Manama Dialogue security conference in Bahrain, he says the conflict would lead nowhere if current tensions are allowed to intensify.

Qatar is leading regional efforts to mediate an interim deal between the U.S. and Iran before U.S. midterm elections next week. Iranian officials spend Saturday and Sunday in Doha for talks with mediators after a Qatari delegation visits Tehran on Friday.

United Arab Emirates diplomatic adviser Anwar Gargash says U.S. and Iranian positions remain far apart, adding that the region has to worry about the worst if those gaps are not bridged. He says the Gulf is braced for the worst but ready to protect its development model, citizens and residents.

Energy infrastructure and market confidence at risk

Concern is building in Iran and across the Gulf that U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu are planning a more intense phase of the war after Americans vote on Tuesday. Regional fears centre on possible strikes against Iranian nuclear and missile facilities, power plants and other infrastructure, followed by retaliatory attacks on Gulf energy sites and civilian assets.

Iran has promised a fierce response, raising alarms over potential attacks on airports, desalination plants and other strategic facilities. Gulf states also fear that a new wave of strikes would further erode investor sentiment and travel demand at a time when trade and transport are already under pressure.

Shipping through the Strait of Hormuz, a critical route for energy exports and regional supply chains, has already been disrupted by Iranian attacks. Arab Gulf states have also faced repeated drone and missile attacks on critical infrastructure, including strikes carried out directly by Iran or through allies such as the Houthis.

In Saudi Arabia, authorities on Saturday mandate remote learning for schools nationwide as missile and drone attacks by the Iran-backed Houthis in Yemen continue to target the kingdom. The Saudi-led coalition says on Sunday that it intercepts a ballistic missile and a drone launched towards the kingdom's southern region.

The UAE absorbs heavy missile and drone attacks in March as Iran responds to U.S.-Israeli strikes by targeting Gulf states. A further escalation in the summer, again after U.S. strikes on Iran, mostly targets Kuwait, Bahrain and Jordan, while Iran's supreme leader Ayatollah Mojtaba Khamenei warns of retaliation "without any geographical limitations" against fresh U.S.-Israel attacks.

Iranian foreign minister Abbas Araghchi says last week that the country's military is fully prepared to defend the homeland, while Iran continues to give diplomacy a chance to succeed.

Our earlier article on how the Middle East war is reshaping global trade highlighted that repeated conflict-driven disruptions are pushing companies to redesign supply chains and shipping routes, not just make temporary wartime adjustments. We also noted forecasts for a sharp drop in the region’s exports and imports as businesses pay more for resilience and diversify away from chokepoints such as the Strait of Hormuz.

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