Gulf Businesses Struggle Amid Iranian Strikes and Regional Shutdowns

Smoke billows from the aftermath of an Iranian strike, following coordinated attacks by the United States and Israel, in Sharjah, United Arab Emirates, on March 1, 2026. REUTERS/Amr Alfiky. As Iranian retaliatory strikes affect the Gulf region, businesses face unprecedented disruptions reminiscent of the COVID-19 era, leading to airport closures, port halts, and turmoil in financial markets. The attacks, which were in response to a U.S.-Israeli operation against Iran, impacted every major Gulf state, disrupting decades of economic stability and growth. Three casualties were reported in the UAE, accompanied by ongoing sound of explosions in Dubai and Abu Dhabi. These strikes signify an alarming escalation for Dubai, a city that prides itself on its relative safety from regional conflicts. From its origins as a fishing village, Dubai evolved into a commercial hub through strategic investments in ports, airports, and luxury sectors. As noted by Vijay Valecha, Chief Investment Officer at Century Financial, the overall economic impact varies; while elevated oil prices might benefit producers like Saudi Arabia and Qatar, sectors such as trade and tourism, particularly in the UAE, could struggle if shipping risks increase or market confidence diminishes. Financial markets reacted negatively, with Saudi Arabia's benchmark index plunging over 4% at the start of trading, ultimately closing down 2.2%. Other Gulf markets also experienced downturns, leading to the rare closure of UAE's exchanges and the suspension of trading in Kuwait. Mohammed Ali Yasin, CEO of Ghaf Benefits, predicted ongoing market volatility linked to military actions. Iranian strikes targeted key infrastructures, affecting airports and major hotels, resulting in fatalities and injuries. With Ramadan representing a critical time for business networking in the Gulf, many corporate events, including those organized by Emirates, Masdar, and GEMS, have been canceled or postponed, compounding the economic impact in a region where personal relationships are paramount. Additional damage was reported in residential areas, raising concerns over the hotel sector's stability following substantial investments in recent hospitality developments. Updated travel advisories from the U.S., UK, and EU urge caution, while major transit airports are shut or restricted, leading to widespread work-from-home directives for international companies, in line with UAE federal labor authority recommendations.