Fitch: Gulf region has buffer capacity to withstand short-term energy disruptions

Fitch Ratings analysts stated that during the Iran conflict, the Strait of Hormuz could be effectively closed, but producers have ways to mitigate this risk. Saudi Arabia and the United Arab Emirates possess alternative pipelines that bypass the strait, and all major exporters store crude oil outside the region. Fitch expects oil and gas activities to experience some short-term shocks, especially for Bahrain, Kuwait, Qatar, and Iraq, which lack alternative routes and rely heavily on the strait. However, higher energy prices can offset temporary disruptions in export revenues, and most Gulf Cooperation Council sovereign states have substantial buffer assets. On the other hand, the suspension of air travel and a slowdown in consumption indicate that non-oil economic activities will also be affected, although possibly only temporarily; regions positioned as international hubs may face long-term damage.