Gulf Oil Exporters hit hardest as Middle East Conflict Weakens region

The conflict that began in February 2026 continues to impose significant economic costs across the MENAAP region, especially impacting Gulf oil-exporting countries due to the closure of the Strait of Hormuz, leading to reduced exports, output, and government revenues. Regional output is projected to contract by 2.1% in 2026, with Gulf Cooperation Council economies shrinking by an average of 4.3%, while oil-importing countries remain relatively resilient with growth at 4.3%. The region faces rising inflation, disruptions in tourism, aviation, logistics, and increasing poverty in fragile economies, but a recovery is possible in 2027 if the conflict ends, driven by rebounding hydrocarbon production and exports.