Most Gulf economies will contract more sharply this year than expected three months ago before rebounding in 2027, a Reuters poll found, as crumbling hopes of a quick U.S.-Iran de-escalation keep the Strait of Hormuz – the region’s oil and gas export lifeline – largely closed.

Economic Impact

The July 7-16 survey of economists was taken as many abandoned assumptions Gulf shipping and energy exports would quickly normalize. Trump’s latest blockade of Iranian shipping and repeated disruptions around Hormuz have lifted oil prices nearly 20% this month to about $85 a barrel.

For Gulf Cooperation Council producers, the shock is less about the price of oil than the ability to sell and ship it. Higher crude prices support revenues, but they are not fully offsetting lost export volumes, costlier freight and weaker investor confidence.

Country Forecasts

Kuwait and Qatar suffered the sharpest forecast downgrades, with both economies now expected to slump 8.1% this year, median forecasts showed, compared with contractions of 4.4% and 6.0% in a poll taken in April.

Bahrain’s economy will shrink 5.1%, sharper than the 2.9% predicted three months ago, while that of the United Arab Emirates (UAE) is forecast to contract 0.5% after economists had previously predicted stagnation.

Saudi Arabia and Oman are the only GCC economies still expected to expand this year, as Saudi can move oil via its East-West pipeline to the Red Sea while Oman’s export terminal sits outside the Hormuz Strait, limiting their exposure to the shipping disruption.

The recovery will be swift next year, according to the latest forecasts. Kuwait topped the 2027 list, expected to grow 10.1%, followed by Qatar at 7.8%, Saudi Arabia with 6.0%, the UAE at 5.8%, Bahrain with 4.5% and Oman at 2.8%.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.