Despite the geopolitical instability surrounding the ongoing Middle East conflict, the United Arab Emirates and Oman are positioned to see their government finances strengthen this year. According to analysis from Capital Economics, the surge in global oil prices has effectively neutralized the negative impact of export disruptions. By capitalizing on increased oil output and leveraging robust sovereign wealth funds, both nations have managed to maintain a strong fiscal outlook, even as supply chains through the Strait of Hormuz face persistent threats.

In contrast, other Gulf nations face a more challenging fiscal reality. Qatar, in particular, has been hit hard due to its heavy reliance on liquefied natural gas, which is significantly more difficult to reroute than oil. Meanwhile, Kuwait and Bahrain are feeling the pressure of wider budget deficits, with Bahrain’s situation being particularly precarious due to its limited financial reserves. While Saudi Arabia has managed to mitigate some risks by utilizing Red Sea export routes, the broader regional outlook remains heavily dependent on how long energy supply chains remain obstructed by the current maritime unrest.