Impact of Middle East Conflict on Gulf Oil Market: Winners and Losers

The ongoing conflict in the Middle East has created a complex situation in the Gulf oil market, with some countries benefiting from rising crude prices while others suffer significant losses. Saudi Arabia emerges as a major winner, leveraging its pipeline infrastructure, while Kuwait and Iraq face dramatic declines in exports and revenues. This article delves into the varying impacts on Gulf nations, highlighting the geographical factors that influence their economic outcomes amidst this crisis.

By Narendra Chaudhary Apr 7, 2026, 19:26 IST

Overview of the Gulf Oil Market Amid Conflict

The ongoing six-week conflict in the Middle East has led to a complex and uneven landscape in the Gulf oil market. While some nations are reaping unexpected financial benefits from rising crude prices, others are facing significant declines in export volumes and revenue.

Following the US and Israeli military actions against Iran in late February, Iran effectively shut down the Strait of Hormuz, a vital passage that typically facilitates around 20% of global oil and LNG shipments. Although Iran later permitted certain tankers without US or Israeli affiliations to navigate through, the disruption has been both severe and unprecedented.

In March, Brent crude prices surged by an astonishing 60%. An analysis from Reuters indicates that while most Gulf nations experienced a sharp decline in export volumes, the dramatic increase in oil prices has resulted in distinct winners and losers based on geographical factors and alternative shipping routes.

Saudi Arabia: A Major Beneficiary

In March, Saudi Arabia saw a 26% drop in crude oil exports, totaling 136 million barrels (averaging 4.39 million barrels per day). However, the nation still reported an increase in revenue, rising to $13.5 billion from $13 billion the previous year. The substantial price hikes compensated for the volume losses, along with additional royalty payments from Aramco. Saudi Arabia has managed to mitigate its losses thanks to its east-west pipeline, which circumvents the Strait of Hormuz and transports oil to the Red Sea port of Yanbu.

Iran and Oman: Unexpected Gains

Iran: Despite the ongoing conflict, Iran's crude exports remained relatively stable, with revenues increasing by 37% to $5.7 billion, up from $4.2 billion last year.
Oman: Although exports saw a slight decline, revenues rose by 26% to $2.9 billion due to higher oil prices.

Kuwait and Iraq: Significant Losses

Kuwait: This nation has been severely impacted, with exports plummeting from 45.5 million barrels to just 8.7 million barrels. Revenues fell dramatically from $3.3 billion to $0.9 billion, marking a nearly 75% decrease. Kuwait lacks major pipelines that bypass the Strait, making it heavily reliant on this route.
Iraq: The situation is even more dire for Iraq, where exports dropped from 101.7 million barrels to 17.4 million barrels. Revenue collapsed from $7.3 billion to $1.7 billion, representing a staggering 76% decline.

UAE and Qatar: Also Affected

The UAE experienced a significant decline in exports, although its Habshan-Fujairah pipeline offered some degree of protection. Nonetheless, attacks on Fujairah limited the benefits, leading to a slight dip in revenues. Similarly, Qatar reported substantial decreases in both exports and revenues.

The International Energy Agency has labeled this situation as the largest energy supply shock globally, with over 12 million barrels per day of production halted and damage inflicted on approximately 40 energy facilities. With no ceasefire in sight and threats of further military action from President Trump until the Strait of Hormuz is reopened, the ongoing instability is poised to have a highly uneven impact on the economies of the Gulf states. The geographical positioning and access to alternative pipelines will ultimately determine which nations emerge stronger or weaker from this high-stakes oil crisis.