A historic shift
The confrontation between the State of Israel and the Islamic Republic of Iran (IRI) in June 2025 marks an acceleration in the reshaping of the Middle Eastern strategic landscape set in motion by the October 7, 2023 attacks, heightening the long-standing concerns of the Arab Gulf states of being drawn into a new Gulf War. Departing from the paradigm of ‘shadow warfare’ that had prevailed since the 1979 Iranian Revolution, the ‘Twelve-Day War’[1] reshaped diplomatic alignments, reverberated across security and economic spheres, and jeopardised prospects for regional de-escalation.
Shaken diplomatic positions
Unsurprisingly, the Gulf Cooperation Council (GCC) member states, along with Iraq, initially condemned Israel’s offensive (Operation Rising Lion), voicing fears over the repercussions of direct American involvement in the conflict. While King Abdullah II of Jordan expressed these concerns most explicitly, the GCC countries likewise underscored their apprehension about Israel’s strategy of reshaping the region by force. Emphasizing the principle of territorial sovereignty, they further pointed to repeated violations of the United Nations Charter and the danger posed by the precedent that such military operations could set.
Secondly, these actors stated their opposition to the American strikes on Iran (Operation Midnight Hammer) – despite their historically complex relations with Tehran – while attempting to reconcile this position with their reliance on Washington’s security guarantees. This balancing act is all the more precarious as most of these states now regard nuclear power as an essential for meeting exponential domestic energy demand (for water desalination, air conditioning, etc.) and to support economic diversification strategies (including data center cooling, AI-related projects, etc.).
Outraged and embarrassed, the Arab Gulf states are nevertheless (and perhaps) relieved to see the threat of a nuclear Iran recede – at least temporarily. Although never acknowledged publicly, the military weakening of Tehran and its proxies represents a welcome development for the states in the region, particularly Saudi Arabia and the United Arab Emirates (UAE), whose critical infrastructure has been targeted several times from the 2019 strikes on ARAMCO’s Abqaiq and Khurais facilities to the 2022 attack on Abu Dhabi, by the Houthis.
However, they remain concerned that Israeli leaders are imposing their strategic views to a U.S. administration that, despite the risks to its Gulf partners, continues to extend unconditional support to Israel. During President Trump’s visit to the region in May 2025, Riyadh, Doha and Abu Dhabi nonetheless pledged to invest hundreds of billions of dollars in the US economy through defence contracts, AI, and other initiatives This sense of frustration was clearly expressed by Dr. Anwar Gargash, diplomatic adviser to the Emirati presidency, in response to comments made by Israeli finance minister Bezalel Smotrich, calling on the GCC to finance Israel’s operations against Iran.
At the same time, Gulf states find themselves publicly embarrassed vis-a-vis Tehran, with which they maintain historically complicated but geographically unavoidable relations. Despite regional tensions, the GCC states are continuing to sustain the détente process initiated in 2022 by the UAE, reinforced by the Riyadh-Tehran reconciliation facilitated in March 2023 by China. Saudi Arabia and the United Arab Emirates are thus striving to adopt middle-ground positions, preserving ties with Western partners, Arab neighbours, Iran and even Israel. Qatar, on the other hand, must manage a national public opinion shaken by Iranian missile strikes on its territory (despite their symbolic and coordinated nature), while Oman has seen its status as a privileged mediator in the Iranian nuclear issue eclipsed by new players, such as Turkey, which hosted the E3/Iran talks at the end of July 2025.
Heightened security concerns
From a security perspective, the Arab Gulf states are aware of the fragility of the ceasefire imposed by President Trump on the morning of 24 June 2025, even as part of Israel’s leadership continuing to pursue an utopian objective of overthrowing the Iranian regime, or more plausibly, provoking its fragmentation. Any destabilisation of Iranian institutions would have severe consequences on the stability of the region. Geographically caught between the belligerents, the Gulf States have good reason to fear prolonged instability: endless negotiations, a ceasefire in which Israel reserves the right to intervene (as in Lebanon), and the risk of Tehran retaliating by reactivating its ‘proxies’ – Iraqi Shiite militias, Hezbollah in Lebanon, Houthis in Yemen, and others.
Maritime security remains a source of concern, particularly due to the risks posed by the Strait of Hormuz, through which 30% of global maritime exports of crude oil and 20% of liquefied natural gas (LNG) shipment pass. While Riyadh and Abu Dhabi have alternative land pipelines – connecting Abqaiq to Yanbu and Habshan to Fujairah respectively – (which offer partial compensation), Iraq, Kuwait, Bahrain and Qatar have no equivalent and therefore depend exclusively on the uninterrupted flow of this strategic chokepoint. Added to these challenges are fears of environmental pollution, since further strikes on nuclear and/or hydrocarbon facilities could pollute the air and waters of the Gulf, endangering marine resources, etc. However, the capabilities of GCC member states to combat cyber, biological, radiological and nuclear (CBRN) threats are limited, exposing their populations to grave health risks as well as the panic that could be triggered by a mass exodus of expatriate residents.
Finally, the resurgence of Houthi offensives in the Red Sea, and the consequent expansion of Israeli military involvement in Yemen, continues to disrupt international maritime traffic, hamper the development of the Saudi coastline (planned as part of ‘Vision 2030’), and weigh heavily on the economy of neighbouring Egypt.
Enormous economic repercussions
Despite its brevity, the ‘Twelve-Day War’ produced significant economic repercussions for the Gulf economies, the full scope of which cannot yet be quantified.
Firstly, crude oil prices spiked by 14% within days, accompanied by a surge in LNG prices prompted Saudi Arabia to rapidly increase its production to stabilise markets – aware that excessive volatility could strain the cohesion of the Organisation of Petroleum Exporting Countries (OPEC). The hostilities, fought primarily in the skies, also severely disrupted Middle Eastern aviation at a time when Saudi Arabia, the UAE and Qatar are locked in intense competition to consolidate their status as the main air hub connecting Asia, Europe and, to a lesser extent, Africa. On 13 June 2025 alone, nearly 700 flights were cancelled and 1,600 flights to Europe and the Middle East[2] were disrupted, offering a glimpse of the wider economic toll during the twelve days of conflicts.
Beyond these immediate and significant losses, investor confidence faltered, with stock indices dropped by 3.6% in Saudi Arabia, 4% in Qatar, 3% in Kuwait, etc. Should such disruptions persist, Gulf sovereign wealth funds may be forced to reconsider their current investment strategies, notably as liquidity is heavily tied up in megaprojects across the Arabian Peninsula, and investments in Africa and beyond. Finally, renewed insecurity threatens to sabotage the region’s burgeoning tourism industry and deter capital inflows at a time when Saudi Arabia, the UAE, and Qatar are also trying to position themselves as technological and financial hubs, pouring resources into cryptocurrency markets, and positioning themselves as gateways between Asian and Western financial centres.
Prospects for regional peace in the balance
While the Trump-Netanyahu partnership seems determined to promote the expansion and consolidation of the so-called ‘Abraham Alliance,’ the recent joint military action against Iran has dealt a serious blow to the future prospects for Israeli-Arab normalisation. A look at the GCC’s most influential actors seems to confirm this intuition, since the United Arab Emirates (a signatory of the accords), Saudi Arabia (which has considered joining them) and Qatar (which is keeping its distance) all reveal, in their own way, the mixed results of their respective positions toward Tel Aviv.
The Emirates, pioneers in this area of normalising relations, realise that cooperation with Israel is destined to remain limited to specific sectors – innovation, security and defence – while public opinion remains divided and largely sympathetic to the Palestinian.
Saudi Arabia, meanwhile, is more conscious than ever of the political risks of normalisation, at a moment when the Kingdom is undertaking a delicate transformation of its society and identity. Mohammed bin Salman (MBS) wishes to position himself as the leader of a middle power with global reach, a status rooted in both mediation efforts and his standing in the Arab-Islamic world. This symbolic capital would be severely eroded by normalisation with Israel absent the simultaneous recognition of a Palestinian state. Finally, Doha may potentially adopt a more pragmatic approach towards Iran following the latter’s weakening, but its position on Israel is likely to remain ambiguous. Qatar’s multiple mediation efforts in Gaza have, de facto, strengthened relations between Qatari and Israeli officials… not to mention the Qatargate scandal. However, the idea of normalisation seems unthinkable for the moment. In the coming months, Turkey’s attitude – particularly towards the question of normalising relations between Israel and Syria – could shape Qatar’s approach. Still, in the absence of a ‘two-state solution,’ normalisation of relations remains extremely unlikely.
Notes
[1] The Israeli operation Rising Lion, launched on 13 June 2025, consisted of an unprecedentedly intense air campaign (culminating in the American operation Midnight Hammer on 21–22 June 2025), aimed at dismantling the nuclear and military infrastructure of the Islamic Republic of Iran. See « E-Note 75 Chloé BERGER & Didier LEROY », IRSD-KHID-RHID (blog), June 27, 2025 consulted on July 10, 2025, available via the following link: https://www.defence-institute.be/en/publications-2/e-note/e-note-75-chloe-berger-didier-leroy/ « E-Note 76 Chloé BERGER & Didier LEROY », IRSD-KHID-RHID (blog), July 2, 2025 consulted on July 10, 2025, available via the following link: https://www.defence-institute.be/en/publications-2/e-note/e-note-76-chloe-berger-didier-leroy-2/
[2] Travel and Tour World, « Over 700 Flights Delayed and Canceled Across Middle East as British, Emirates, Qatar, Air France, Air China, United and More Disrupted at Ben Gurion, Dubai, Sharjah and Amman Amid New Escalating Israel Iran Conflict», Travel and Tour World, June 16, 2025, consulted on August 5, 2025, available via the following link: https://www.travelandtourworld.com/news/article/over-700-flights-delayed-and-canceled-across-middle-east-as-british-emirates-qatar-air-france-air-china-united-and-more-disrupted-at-ben-gurion-dubai-sharjah-and-amman-amid-new-escalating-israe/ ; on the broader consequences for the Gulf’s aviation sector, see Yashraj Sharma, « Are airlines stopping flights to the Middle East amid soaring tensions», Al Jazeera, June 23, 2025, consulted on August 5, 2025, available on the following link: https://www.aljazeera.com/news/2025/6/23/us-bombs-iran-are-airlines-stopping-flights-to-middle-east
