Gulf States to Withdraw US Investments as Iran War Escalates Economic Strain
Saudi Arabia, the United Arab Emirates, Kuwait and Qatar have initiated discussions on withdrawing from existing contracts with the United States and halting future investment pledges.
The moves come as these nations grapple with mounting budget pressures from the ongoing conflict between the US, Israel and Iran, which erupted over the weekend of February 28 to March 1, 2026.
Iranian forces have targeted Gulf infrastructure in retaliation for US and Israeli strikes that included the assassination of Iran's supreme leader, Ayatollah Ali Khamenei, in Tehran.
Iranian missiles and drones have struck key sites across the Gulf region, including Saudi Arabia's largest oil refinery in Riyadh, a liquefied natural gas production facility in Qatar, data centers in the UAE operated by companies such as Amazon, and ports in Dubai and Oman.
These attacks have disrupted oil exports, halted shipping through the Strait of Hormuz, grounded airlines and closed airports.
Energy revenues have plummeted as global oil prices surged amid supply fears, while tourism and trade hubs like Dubai face cancellations and evacuations of foreign visitors.
The conflict originated when US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu authorized military action against Iranian nuclear sites and leadership on February 28, 2026, citing threats from Tehran's nuclear program and regional influence.
Iran responded by launching barrages at US military bases in the Gulf and directly at allied states, escalating the war into a broader regional crisis.
Major Gulf governments, which host thousands of US troops, had previously urged diplomatic resolutions and distanced themselves from the strikes, with Oman mediating talks between Washington and Tehran before the outbreak.
Sovereign wealth funds in the Gulf hold over $2 trillion in US assets, spanning real estate, technology firms and Treasury bonds.
Any withdrawal could trigger market volatility, as officials weigh invoking force majeure clauses in contracts to exit commitments without penalties.
The reviews extend to sports sponsorships, business deals and asset sales abroad.
“A number of Gulf countries have begun an internal review to determine whether force majeure clauses can be invoked in current contracts, while also reviewing current and future investment commitments in order to alleviate some of the anticipated economic strain from the current war,” a Gulf official said.
Ports operator DP World suspended operations at Jebel Ali in Dubai after drone hits, while Saudi Aramco reported fires at refining facilities that cut output by 20%.
QatarEnergy confirmed damage to LNG export terminals, delaying shipments to Europe and Asia.
UAE authorities closed the US embassy in Abu Dhabi temporarily after nearby explosions, and Kuwait evacuated non-essential diplomatic staff.
The US State Department urged American citizens to depart the region immediately, listing over a dozen countries including the Gulf states due to flight disruptions and security risks.
Iran has vowed to target any vessels attempting to traverse the Strait of Hormuz, further choking global energy flows that account for 20% of world oil supplies.
Gulf leaders issued condemnations of the Iranian assaults, with Saudi Arabia's Foreign Ministry labeling a drone strike on its Riyadh embassy as a "flagrant Iranian attack."
US Secretary of State Marco Rubio announced plans to stabilize oil markets through increased domestic production and coordination with allies, as futures prices rose over 6% on March 4, 2026.
