Even against the backdrop of a regional conflict that began in 2023, the Middle East’s main business hubs saw a steady stream of financial workers and firms because the wealthiest Gulf petrostates remained largely insulated.
But as hostilities between Israel and Iran have surged and the possibility of a US strike on Iran has risen, global financiers have become increasingly concerned about potential fallouts in neighboring countries.
In Dubai, often regarded as the region’s main financial hub, more than half a dozen investors and financial executives agreed that any intervention from the US would impact their plans for Gulf. An executive at a local family office who asked not to be named discussing his own views said the impact of geopolitical volatility had so far been contained, but direct involvement from Washington could upend things.
Israel struck Iran last week in the latest escalation, drawing a sharp response from Tehran, which has retaliated with 400 ballistic missiles and hundreds of drones. Senior US officials were preparing for the possibility of a strike on Iran, Bloomberg News reported earlier this week — a move that could threaten the allure of nearby countries. Trump will decide within two weeks whether to strike Iran, his spokeswoman said.
Khalaf Al Habtoor, real estate mogul and one of Dubai’s most prominent businessmen aired his concerns on X Wednesday, saying that the “region is now facing a real strategic danger” and calling for collective preventative action by the United Nations, international atomic energy agencies and influential powers.
“The Middle East needs calm not escalation, cooperation not conflict,” he said.
Mitesh Parikh, global co-head of discretionary macro & fixed income at Schonfeld Strategic Advisors in the UAE, cautioned that traders were perhaps underpricing risk.
Flights have already been disrupted. American Airlines Group Inc. suspended daily flights from the US to Qatar’s capital, while United Airlines Holdings Inc. paused service to Dubai because of the heightened tensions in the region.
The MSCI GCC Countries Combined Index had slid 3.7% since June 12 through Wednesday’s close, under-performing both the S&P 500 and the MSCI Emerging Markets Index. Dubai’s benchmark index has led losses in the Gulf over that period, dropping over 5%.
The Middle East head of a global firm in Dubai said he was checking flights in a bid to see if he can send his family to his home country until the picture becomes clearer.
Several others who asked not to be identified discussing internal matters said they were in constant contact with their headquarters to go over contingency plans in case the conflict escalates. One senior real estate executive said he planned to temporarily leave Dubai, asking not to be named discussing a personal matter.
Gulf states are long-time allies of the US. The UAE is home to thousands of American military personnel while the US Air Force maintains significant presence and assets at the Prince Sultan Airbase outside Riyadh. Qatar hosts a large US base in the region, while Bahrain is home to the US Navy’s Fifth Fleet.
The US also has large military bases in places like Kuwait and Iraq. Iran has threatened to attack US assets if Washington proceeds with a strike.
In the UAE, the twin hubs of Dubai and Abu Dhabi have lured banks and hedge funds as traders have embraced zero income taxes, a time zone conducive to working with both East and West and a lifestyle tailor-made for the rich. Saudi Arabia and Qatar, meanwhile, have also been attracting financial firms in an attempt to diversify away from oil.
Bloomberg Economics predicts a US intervention is the most likely outcome.
Saudi Arabia, the UAE and Qatar, the Gulf’s three largest economies, have all been quick to condemn Israel’s attack, calling for a comeback to diplomacy.What Bloomberg Economics Says...
“Why could this scenario happen? 1- Israel shows no signs of backing down, and has pulled the US into conflict before. 2- Trump could see this as a way to accomplish his goal of ending Iran’s nuclear program. 3- His recent moves: quitting the G-7 early, threatening Iran, urging Tehran’s evacuation, and moving US military assets toward the region all flag the possibility of direct US engagement.”
— Ziad Daoud, chief emerging-markets economist and Dina Esfandiary, Middle East geoeconomics analyst.
Many executives are clinging to the hope the situation can be contained and the US stays out of the war.
“Usually people feel extremely safe here,” said UAE-based Bhaskar Dasgupta, principal at Sun Foundation. He knows one Canadian who has returned to Toronto, but most in the Gulf country still feel “safe, secure and happy,” he said.
Dubai-based Austen Smart, who’s managing director at Tighe International, which helps financial firms recruit executives in the Gulf, said that while some are changing holiday plans due to regional tensions, his firm remains “exceptionally bullish on the region’s resilient future.”
In recent years, global banks and hedge funds have grown increasingly willing to set up in the Gulf as key nations forged alliances and signaled a desire to avoid conflict.
But those moves to ensure peace in the region are now under direct threat.
Dubai’s real estate industry has seen prices skyrocket over the last few years as expats have poured in. But demand for property in the UAE hinges on containing geopolitical conflicts, Bloomberg Intelligence wrote in a report.
Brent crude prices are near $77 a barrel, almost 19% higher than a month ago and edging closer to more comfortable levels for oil-reliant economies across the Gulf. Still, in a report on Monday, S&P Global Ratings described “increasing downside risk” for the region’s economies from the prospect of disruptions to key transportation routes, fluctuating energy prices, reduced tourism, capital outflows, higher security spending and weaker consumer and investment confidence.
“We have in recent years identified geopolitical risk as one of the key downside risks for sovereign creditworthiness, with implications for the global economy,” according to S&P analysts including Benjamin Young. “The escalation of the Israel-Iran conflict, since June 13, 2025, increases those risks by introducing an additional stress factor to the base case scenario that underpins most of our regional sovereign ratings.”
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