Iran retaliation forces Gulf airport closures, disrupting trade and markets

The attacks came after a joint US-Israeli assault on Iran and struck across the main Gulf states, challenging a region that has spent decades promoting itself as one of the world’s most dependable places to do business.

In the United Arab Emirates, three people were killed, while loud explosions were heard for a third day in Dubai and Abu Dhabi on Monday.

For Dubai, the escalation is especially striking.

The emirate’s modern brand has long rested on being insulated from the Middle East’s conflicts.

Once a small fishing settlement, Dubai used limited oil income to build ports, airports and trade centres, then pivoted in the 1990s towards luxury tourism, real estate and financial services.

“Regionally, the impact across (Gulf) economies is mixed,” said Vijay Valecha, chief investment officer at Century Financial.

He said higher oil prices could offer “a fiscal cushion” for producers such as Saudi Arabia and Qatar, supporting revenues and liquidity, but warned that the UAE’s trade, logistics and tourism sectors could come under strain if shipping risks grow or regional sentiment deteriorates.

Gulf stock markets slid sharply when trading opened on Sunday.

Saudi Arabia’s benchmark index fell more than 4% at the open before ending the session down 2.2%. Oman closed down 1.4%, and Egypt lost 2.5%, both trimming earlier declines.

Qatar’s index was down 2% in early trading on Monday.

The turmoil has also rippled beyond the region.

Brent crude jumped to just over $78 a barrel on Monday, from a Friday close of $72.87.

Asian equities fell across the board, with Japan’s Nikkei down 1.6%, Hong Kong’s Hang Seng off 1.8% and Taiwan’s benchmark lower by 0.9%.

With UAE financial markets not trading on Sundays, the country took the unusual step of closing its exchange on Monday and Tuesday.

Kuwait, which was shut on Sunday, suspended trading until further notice.

“Markets will continue to be fragile and volatile as long as the military actions are active,” said Mohammed Ali Yasin, chief executive of Ghaf Benefits, a Lunate company in Abu Dhabi, speaking before news of the market closure.

He said international institutional investors typically provide the initial selling pressure in such episodes, while local investors often try to cushion declines by buying leading stocks.

Iran’s strikes hit airports, military sites, ports and hotels across the Gulf.

Dubai International Airport and Abu Dhabi’s Zayed International Airport were both damaged, with one civilian killed and 11 injured across the two sites.

At Dubai’s Jebel Ali Port, a berth caught fire after an aerial interception.

The UAE is home to major companies such as Dubai developer Emaar Properties and retailer Majid Al Futtaim, and has attracted global hedge funds and major banks seeking proximity to vast sovereign wealth managed by ADIA and Mubadala.

The timing has added another layer of disruption.

The strikes fell during Ramadan, when corporate iftars and suhoors, the communal meals that break and begin the daily fast, are among the Gulf’s most important business networking occasions.

Emails seen by Reuters show that events hosted by Dubai carrier Emirates, Abu Dhabi energy company Masdar, Mubadala and education firm GEMS, along with the Department of Government Enablement, were cancelled or postponed.

In a region where personal relationships underpin deal-making, the loss of Ramadan’s networking season carries a less visible but significant cost.

Residential areas around Dubai Marina and Palm Jumeirah were also hit, setting the Fairmont The Palm hotel on fire and damaging the Burj Al Arab.

The Fairmont was recently sold for $325 million to Kuwait’s Arzan Investment Management, a deal seen as a marker of booming Gulf hospitality demand, making the damage one of the clearest symbols of the blow to the region’s tourism economy.

Following the strikes, the United States, the UK and the European Union updated travel advisories for the Gulf, urging citizens to avoid non-essential travel.

Key transit airports, including Dubai, Abu Dhabi and Doha in Qatar, were shut or heavily restricted on Sunday as much of the region’s airspace remained closed.

Reuters