US-Iran war leaves Gulf with $200bn damage and $790bn output loss forecast through 2030

Gulf countries face more than $200 billion in physical damage from the US-Iran war and a projected $790 billion loss of economic output through 2030, insurer Allianz Trade said on Wednesday. The output losses would amount to nearly four times the estimated damage to buildings, infrastructure and other physical assets.

The conflict began after the United States and Israel attacked Iran on February 28, with Gulf states bearing much of Tehran’s retaliation. Iran restricted shipping through the Strait of Hormuz and targeted infrastructure in countries allied with Washington, hitting ports, airports, landmarks and energy installations, as well as American assets.

Allianz Trade put physical damage across the region at just over $200 billion, concentrated largely in economies dependent on passage through Hormuz. Energy infrastructure accounted for a particularly significant share of the destruction.

More than 80 energy facilities were struck during the war, principally in Bahrain, Kuwait and Qatar, the insurer said. A third sustained severe damage. The economic effects also extend beyond energy, with tourism and real estate facing slower growth over the coming years.

For the Gulf Cooperation Council, Allianz Trade forecast cumulative lost output of $790 billion through 2030, equivalent to a 5.9 percent gap in gross domestic product against the pre-war trajectory. That estimate covers 2026-30 and measures the difference between what the region had been expected to produce before the conflict and its revised post-war outlook.

Gulf governments are expected to respond by redirecting sovereign wealth fund capital towards projects at home. The insurer anticipates that the region’s external surplus will fall by half, although bringing more sovereign wealth fund money back domestically would partly offset that decline.

That shift could deliver about $120 billion in additional domestic investment through 2030, at the expense of investment abroad. Allianz Trade said the war was increasing pressure for domestic spending as governments moved their priorities from mega-projects towards security and resilience.

Domestic infrastructure and defence expenditure by Gulf states is expected to reach between $380 billion and $400 billion through 2030. The insurer estimated that this would create opportunities worth around $160 billion for foreign and private investors.

Despite the conflict and constrained access to both Hormuz and the Bab al-Mandab strait, Saudi oil producer Aramco announced last week that third-quarter net profit had risen 34.6 percent. Iran’s restrictions on shipping through Hormuz have pushed oil prices higher.

The International Monetary Fund nevertheless expects Saudi Arabia, one of the world’s largest oil producers, to finish the year with a 3.3 percent contraction in gross domestic product. That projection is five percentage points below its previous forecast in July.