Gulf shield strains as Iran escalates

Gulf states intercepted fresh missiles and drones on Sunday after Iran threatened to widen its war, underscoring how a conflict that began with U. S. and Israeli strikes on Iran has spread far beyond its original battlefield and pushed oil producers, airlines and port operators across the Arabian Peninsula into a prolonged state of emergency. Saudi Arabia said it had intercepted 10 attacks, while authorities in the UAE, Bahrain and other states warned residents as air defences responded to incoming projectiles.

Iran’s warning carried added weight because it was paired with specific threats against Gulf economic infrastructure. Tehran accused the United States of launching Friday’s strikes on Kharg Island from the UAE, an allegation denied by Emirati officials, and Iranian officials signalled that ports and energy facilities linked to U. S. interests could come under fire. Gulf governments have insisted their territory and airspace were not used for attacks on Iran, but that has not spared them from retaliatory salvos that have already struck airports, hotels, ports, oil installations and military sites across the region.

That has left Gulf capitals confronting a familiar dilemma in sharper form: they remain closely tied to Washington for security, yet they are absorbing much of the economic and strategic fallout from a war they did not launch. Analysts quoted by Reuters said resentment has been building in the region as governments that neither initiated nor endorsed the conflict now face attacks on civilian and commercial assets, weakened business confidence and renewed questions over the limits of U. S. security guarantees. The unease echoes older Gulf concerns that strategic alignment with Washington can expose the region without insulating it from retaliation.

Energy markets have become the clearest measure of that vulnerability. The Strait of Hormuz, the conduit for roughly a fifth of the world’s oil and liquefied natural gas, has been effectively shut for most global shipping since the war began on February 28, according to Reuters. The International Energy Agency said the closure had triggered the largest oil market disruption on record and could remove around 8 per cent of global supply in March. Crude has climbed above $100 a barrel, and the strain on export routes has forced traders, shipowners and importers to reprice both energy risk and transport risk almost daily.

Fujairah in the UAE illustrates why the region’s infrastructure has become so central to the story. The port sits outside the Strait of Hormuz and has long been prized as a partial bypass for Gulf crude. A drone attack and fire there halted some oil-loading activity before operations resumed on Sunday, though it remained unclear whether the terminal was back to normal capacity. Fujairah exported more than 1.7 million barrels a day in 2025 and serves as a major storage and marine-fuel hub, meaning any sustained disruption there would ripple far beyond the Gulf.

The spillover is visible in markets and transport as well as energy. Gulf stock indices mostly fell on Sunday, with benchmarks in Saudi Arabia, Qatar, Bahrain, Kuwait and Oman ending lower as investors weighed the prospect of more strikes and a longer interruption to trade. Airspace restrictions and security alerts have compounded the pressure on tourism and logistics, and Formula One confirmed that the Bahrain and Saudi Arabian Grands Prix scheduled for April would not go ahead. The broader message from investors is that even successful interceptions do not remove the cost of a conflict when the threat remains constant.

Diplomacy, for now, appears stuck between public signalling and battlefield escalation. President Donald Trump said countries dependent on Gulf oil should help secure the Strait of Hormuz and warned of more strikes on Kharg Island, while saying the terms offered by Tehran were not yet good enough for a deal. Iran’s foreign minister, Abbas Araghchi, said Tehran was prepared to consider proposals that included a complete end to the war, but Iran’s military command also repeated threats against U. S.-linked oil, economic and energy infrastructure if Iran’s own facilities were attacked again. Britain and France have discussed options for securing shipping, yet no major coalition move has materialised while missiles continue to fly.