The sovereign wealth funds and investment pledges of Gulf allies to Washington have come under doubt after the US and Israel began a war on Iran.
According to a report in the Financial Times, three of the four major Gulf economies – Saudi Arabia, the United Arab Emirates (UAE), Kuwait and Qatar – have quietly begun reviewing whether they can invoke force majeure clauses in existing contracts and scale back future investment commitments.
Energy revenues have fallen sharply, shipping through the Strait of Hormuz (through which a fifth of the world’s oil and gas passes) has ground to a halt with at least 10 tankers struck, defence spending has spiked and Iranian strikes on US bases, embassies, airports, hotels and residential buildings have damaged tourism and aviation across the region.
“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,” a Gulf official told the FT.
The review, the official said, could affect anything from investment pledges to foreign states and companies, sports sponsorships, contracts with businesses and investors and sales of holdings.
Damage on the ground
Qatar, the world’s second-largest Liquefied Natural Gas (LNG) producer, declared force majeure this week after suspending production following a drone attack on its main LNG plant. One of Saudi Arabia’s largest oil refineries has also been struck.
Saudi Arabia, the UAE and Qatar had pledged to invest hundreds of billions of dollars in the US following Trump’s visit to the region last year. An adviser to a Gulf government told the FT that the prospect of an investment pullback had already caught the White House’s attention.
Any sustained move to redirect Gulf investment away from the US or other Western countries could, the FT suggests, increase pressure on Trump to seek a diplomatic end to the conflict.
The anger in the Gulf is also spilling into public view. Emirati businessman Khalaf al-Habtoor addressed Trump directly on X: “Who gave you the authority to drag our region into a war with Iran? Did you calculate the collateral damage before pulling the trigger?”
He pointed to the billions Gulf states had contributed to Trump’s Gaza rebuilding plan and his wider “Board of Peace,” asking: “Are we funding peace initiatives or funding a war that exposes us to danger?”
