The World Bank has projected that the six Gulf Cooperation Council (GCC) economies will contract by an average of 4.3% this year, as the ongoing Iran war continues to disrupt trade and business across the region. The forecast, released in the bank's regional update on Tuesday, underscores that higher oil prices have failed to offset the steep decline in export volumes, which has weighed on both output and government revenues.
While Middle Eastern crude exports have occasionally surpassed pre-war levels—Reuters reported on Wednesday that they did so on 14 days in September, citing provisional data from Kpler—the overall picture remains bleak. The World Bank's assessment covers the full year and extends beyond the oil sector, capturing the broader economic toll of the conflict.
Energy exports: a fragile recovery
Some gas shipments are also getting through. Reuters reported on Monday that four vessels carrying Qatari liquefied natural gas (LNG) had reappeared outside the Strait of Hormuz around 2–3 October. However, the disruption has been severe. Italian energy company Edison said on 28 September that QatarEnergy had extended its force majeure notification to early December, citing an inability to deliver further scheduled cargoes.
That notice brought the total number of affected cargoes between April and early December to 35, equivalent to roughly 4.6 billion cubic metres of gas destined for Italy's Adriatic LNG terminal. Edison said it had secured replacement supplies and remained able to meet its commitments to customers. The knock-on effects are being felt across Europe, where buyers have had to replace missing gas supplies, adding to the continent's energy challenges.
Aviation: a sector under pressure
The aviation industry is also suffering. According to figures published by the International Air Transport Association on 30 September, passenger traffic on Middle Eastern airlines fell 14.6% in August compared with the same month last year. The measure accounts for both the number of paying passengers and the distance travelled. Available capacity dropped 9.3%, leaving a larger share of seats empty as traffic declined faster.
Yet regional carriers are picking up some passengers whose flights have been cancelled by European and other airlines. Aviation consultant Omar Hashmi noted that Emirates, Qatar Airways, and Etihad serve both connecting passengers and visitors to the Gulf. He also pointed out that longer routes due to closed airspace add fuel costs and create scheduling headaches.
“When airspace is closed, and routes become longer, there is also the headache that flight timings change,” Hashmi told Euronews.
At a briefing in Doha on Tuesday, Qatari officials warned that the “whole world is paying” for the conflict, even as diplomatic efforts to advance talks between Washington and Tehran continued.
The economic strain on the Gulf is not an isolated issue. European nations, particularly those reliant on energy imports, are feeling the ripple effects. The emergency diesel release and record diesel prices are just some of the symptoms of the broader energy crunch. Meanwhile, EU farmers are being squeezed by rising input costs, and real wages are declining in several major EU economies.
The World Bank's forecast serves as a stark reminder that the cost of the Iran war extends far beyond the immediate conflict zone, hitting economies from the Gulf to Europe and beyond.
