Analysis-US ignites iran war, but gulf arab states pay the price, gulf sources say

US-Iran War Triggers Economic Fallout and Security Risks for Gulf States

Economic and Security Impacts on Gulf States Amid US-Iran Conflict

By Samia Nakhoul

DUBAI, March 11 (Reuters) - The U.S. may have pulled the trigger on the Iran war, but it is the oil-producing Gulf that will pay the price, Gulf sources and analysts say, signalling unease in ties between a region under Iranian attack and the superpower it relies on for protection.

Behind the scenes, resentment is mounting in Gulf Arab capitals at being drawn into a war they neither initiated nor endorsed but are now paying for economically and militarily, with airports, hotels, ports and military and oil installations hit by Iranian strikes, said three regional sources, who declined to be identified as they were not authorised to speak publicly.

Gulf States Caught in the Crossfire

"It is not our war. We did not want this conflict, yet we are paying the price in our security and our economy," Ebtesam Al-Ketbi, President of the ⁠Emirates Policy Center, told Reuters.

That doesn't mean Iran is "innocent", she said. Gulf governments had assured Tehran they would not allow their territories or airspace to be used by Washington in the war. Yet Iran has unleashed waves of drone and missile strikes across the region despite those assurances, denting business confidence in the process.

'Injured Lion' Post-War Scenario Concerns

'INJURED LION' POST-WAR SCENARIO IS ANOTHER GULF WORRY

While disquiet about U.S. President Donald Trump is growing over a conflict many believe he launched without consultation, some regional sources argue that having started the war, Washington should now see it through to eliminate what they see as a persistent Iranian threat on their doorstep.

“If America leaves the war now without achieving victory, it will be like abandoning an injured lion,” Ketbi said. “Iran will remain a threat to the region, capable of striking again. And if the regime collapses, leaving a power vacuum, neighbouring states will suffer the consequences.”

US and Israeli Response

Asked for comment, the White House said U.S. and Israeli strikes had reduced Iran’s retaliatory missile attacks by 90 percent, "crushing their ability to shoot these weapons or produce more".

White House spokeswoman Anna Kelly added that Trump was in close contact with Middle East partners and that Iran’s attacks on its neighbors underscore why the threat had to be eliminated.

There was no immediate response from Gulf states to requests for comment.

Disruption to Oil and Air Travel

Iran's Supreme Leader, Ayatollah Ali Khamenei, was killed on the first day of the war. Tehran responded by hitting Israel and Gulf states hosting U.S. military installations, effectively halting oil and gas shipments through the Strait of Hormuz -- a conduit for roughly a fifth of the world’s petroleum and LNG.

    Across the region, airspace closures have resulted in airlines cancelling some 40,000 flights, the largest disruption to global air travel since the COVID-19 pandemic. Gulf tourism meanwhile is also taking a hit, putting at risk the region's carefully crafted image as a safe and high-end vacation hotspot.

Gulf States Project Resolve and Reassess Security

GULF STATES PROJECT RESOLVE, REASSESS SECURITY

Amid the turmoil, Gulf states have sought to project calm and resolve. The president of the United Arab Emirates, Sheikh Mohammed bin Zayed Al Nahyan, said on Friday his nation was in a time of war but was well and told his enemies it was no easy prey, in his first public comments since Iran fired missiles at the UAE.

Reevaluating Security Alliances

At the same time, analysts say the war has left Gulf states reassessing both their security dependence on Washington and the prospect of eventually engaging Tehran on new regional security arrangements -- even as trust in Iran has collapsed.

For decades, relations between Washington and the Gulf states rested on an implicit trade-off: Gulf energy and capital -- including hundreds of billions of dollars spent on U.S. arms, advanced technology and goods and services -- in return for U.S. protection, said Fawaz Gerges of the London School of Economics.

Gerges said the war had shaken those assumptions. Now, he said, Gulf states would accelerate efforts to diversify their foreign and security partnerships, realising "they cannot really rely on the United States to protect their energy, oil, gas, their people and their sovereignty.”

The Gulf's latest misgivings about Washington echo disquiet felt in Saudi Arabia at the U.S. failure to retaliate against Iran after drone and missile attack in 2019 on the kingdom's Abqaiq and Khurais oil facilities. Washington and Riyadh blamed the attacks on Tehran, which denied responsibility.

Abdulaziz Sager, Chairman of the Saudi-based Gulf Research Center, said Washington had failed to prepare safeguards for its regional allies or ensure oil and gas flows during wartime, saying the cost on the Gulf states' economies is "horrendous".

Business Leaders and Economic Concerns

BUSINESSMAN DECRIES 'DRAGGING THE GULF INTO A CONFLICT'

Calls for Stronger Regional Defense

Sager said the war had demonstrated the limits of relying solely on external security guarantees, particularly from the United States, adding that Gulf countries need to strengthen their own defense capabilities and prepare for future crises.

"External powers also tend to make decisions based on their own strategic interests rather than those of the Gulf. As a result, Gulf states will likely pursue a more cautious and balanced approach in their relations with both Iran and major international partners," added Sager.

Public Criticism of US Policy

In a rare public rebuke, prominent Emirati businessman Khalaf Al Habtoor questioned the objectives of the U.S.-Israeli war on Iran.

“If the strikes were aimed at containing Iran, did they take into account the regional consequences -- or was the cost of dragging the Gulf into a conflict it was not party to simply ignored?” said Al Habtoor, founder of the Al Habtoor Group.

Energy Market Risks

Saudi Aramco CEO Amin Nasser warned on Tuesday that continued disruption to shipping through Hormuz would have “catastrophic consequences” for oil markets.

Iran’s Re