Saudi Arabia and the Emirates directly attack Iran: A historic turning point in the Middle East

Oil shock and water crisis: How the new Middle East conflict is making our lives more expensive

Axis against Tehran: The secret military alliance between the Emirates and Israel

The Middle East stands at a historic turning point, the shockwaves of which are being felt far beyond the region. What was considered an absolute red line for decades became a bitter reality in the spring of 2026: Saudi Arabia and the United Arab Emirates (UAE) launched direct and covert military strikes against targets on Iranian territory for the first time. This unprecedented escalation is the drastic response to a massive barrage of missiles and drones from Tehran that targeted the critical infrastructure of the Gulf monarchies on an unprecedented scale. The New York Times underscores recent reports by Reuters and the Wall Street Journal that this strategic paradigm shift is fundamentally reshaping the entire security architecture of the region. But the consequences of this taboo-breaking move are no longer confined to the Persian Gulf. With the de facto blockade of the Strait of Hormuz, the global economy faces a massive oil price shock, fueling global inflation fears and threatening a worldwide recession. The following report analyzes the background of the covert operations, the dramatic economic consequences, and the question of what remains of the old order in the Middle East.

The taboo-breaking of the Gulf monarchies — or: When self-control reaches its limits

From spectator to counterattack: The moment that changed golf architecture

What had been considered virtually unthinkable for decades became reality in the spring of 2026: Saudi Arabia and the United Arab Emirates independently launched direct military strikes against targets on Iranian territory. The New York Times, citing current and former high-ranking US officials, confirmed in mid-May 2026 what Reuters and the Wall Street Journal had already reported—namely, that both Arab Gulf states had taken the decisive step toward an active, albeit covert, entry into the war. It was the first time in modern history that the two most powerful Arab states in the Gulf had launched a military attack on Iranian soil.

This move marks not merely a tactical shift, but a structural redefinition of the regional security order. For decades, Riyadh and Abu Dhabi had relied on the American security umbrella and strictly avoided their own offensive actions against Iran, even when Iranian proxies attacked their interests in Yemen, Iraq, or Lebanon. The fact that this framework has now been shattered underscores the magnitude of the threat created by the ongoing US-Israeli war against Iran, which began in late February 2026.

The trigger: Iran's wave of attacks on the Gulf States

To understand this covert counterattack, one must first grasp the scale of Iranian attacks on Saudi Arabia and the UAE. Since the start of the US-Israeli air campaign against Iran on February 28, 2026, Tehran has bombarded all six member states of the Gulf Cooperation Council with missiles and drones—targeting not only US military bases but also civilian infrastructure, airports, ports, energy and oil facilities, and residential areas. According to the Emirati Ministry of Defense, some 550 ballistic and cruise missiles and over 2,200 drones were fired at the United Arab Emirates alone—more than against any other nation.

By the end of March 2026, Saudi Arabia had recorded over 105 drone and missile attacks in a single week. An Iranian attack on a Saudi airbase injured twelve American soldiers. In March, Iran also targeted energy infrastructure in Qatar and Saudi Arabia, forcing QatarEnergy to temporarily halt LNG production. Iran's message was unequivocal: the Gulf states hosting US bases should pay the political price for the American-Israeli military operation.

Covert pinpricks: What exactly Saudi Arabia and the Emirates did

According to two Western and two Iranian officials, Saudi Arabian forces carried out a series of undisclosed airstrikes on Iranian territory in late March 2026. The exact targets remained unclear—Reuters could not confirm the specific locations. Crucially, those involved interpreted the strikes as "tit-for-tat" retaliation for Iranian attacks on Saudi infrastructure. A noteworthy diplomatic measure was taken: Saudi Arabia informed Iran of the strikes in advance and maintained regular contact with Tehran through the Iranian ambassador in Riyadh to prevent an uncontrolled escalation.

The United Arab Emirates acted differently and more aggressively. Their armed forces, equipped with American fighter jets and helicopters, attacked an oil refinery on the Iranian island of Lavan in the Persian Gulf in early April 2026, according to reports in the Wall Street Journal and Bloomberg—an attack that rendered large parts of the facility inoperable for months. This strike was coordinated with Israel and timed to coincide with an Israeli attack on Iran's South Pars petrochemical complex. An Israeli Iron Dome missile system had already been deployed to the Emirates at that time—the first such deployment outside of Israel.

Two strategies, one intention: The difference between Riyadh and Abu Dhabi

The actions of the two states differed fundamentally in objectives and temperament, although they stemmed from the same source of distress. Saudi Arabia pursued a strategy of controlled deterrence: striking, but defusing escalation diplomatically. This dual logic—military retaliation combined with intensive dialogue—led to an informal de-escalation agreement between Riyadh and Tehran shortly before a Pakistani-brokered ceasefire between the US and Iran came into effect on April 7, 2026. The effect was measurable: the number of Iranian attacks on Saudi Arabia fell from over 105 in the week of March 25–31 to only around 25 in the first week of April.

Abu Dhabi, however, pursued a tougher line aimed at exacting a substantial price from Iran. The Emirati strikes occurred both before and after the April 8 ceasefire. Tehran responded to the attacks on Lavan Island with a massive missile salvo against the UAE and Kuwait. Iran accused the UAE of violating the “principles of good neighborliness” and signaled in advance to Saudi Arabia and Oman that it would treat the UAE as a preferred target for more intensive retaliatory strikes. Washington tacitly supported the Emirati attacks and, according to a US official speaking to the Wall Street Journal, encouraged other Gulf states to support the UAE in its actions.

The oil price shockwave: How the Strait of Hormuz hit the global economy

The economic damage caused by the conflict can hardly be overstated. At its heart lies the Strait of Hormuz—the 55-kilometer-wide waterway between Iran and the Arabian Peninsula, through which approximately 20 percent of the world's oil and gas flows. Following the start of the US-Israeli attacks, Iran effectively closed the strait. On March 4, 2026, passage was largely shut down to tankers, triggering a global oil price shock.

Brent crude oil was trading below $70 per barrel on February 27, 2026. By early April, the price had climbed to nearly $128—an increase of over 80 percent in just a few weeks. The International Energy Agency described the disruption as "the largest supply disruption in the history of the global oil market." Goldman Sachs warned that Brent could trade above $100 for the remainder of 2026 if the road was not fully reopened, and projected a scenario of up to $120 in the third quarter if the closure continued. The U.S. Energy Information Administration (EIA) raised its annual forecast for Brent from $78.84 to $96 per barrel. Based on an average Brent price of $103 in March, natural gas prices rose by almost 60 percent.

The global economy is on the brink: IMF warns of a global downturn

The economic repercussions extended far beyond the oil market. In its World Economic Outlook, the International Monetary Fund (IMF) lowered its global growth forecast for 2026 from 3.4 percent to 3.1 percent in the event of a short conflict. The worst-case scenario—a protracted war with persistently high energy prices—would squeeze global growth to two percent and push inflation to six percent; a level considered a global recession by historical standards, one that has only been breached four times since 1980. IMF Chief Economist Pierre-Olivier Gourinchas put it succinctly: the war had abruptly interrupted a stable growth trajectory.

The eurozone was hit particularly hard. The S&P Global Purchasing Managers' Index for the eurozone fell to 47.6 points, signaling a contraction, while the manufacturing input price index rose to 76.7—an indicator of dramatically increased production costs. Textile factories in India and Bangladesh closed, flights in Ireland, Poland, and Germany were canceled, and energy-saving programs were activated in Vietnam, South Korea, and Thailand. Ironically, the US, the country that started the war, proved comparatively resilient to the fallout.

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Winners and losers: Who profits from war and who loses

While millions struggle with rising energy and food prices, some companies have profited extraordinarily from the crisis. BP reported a profit jump to $3.2 billion for the first quarter of 2026—driven by an “exceptional” performance from its trading division. TotalEnergies boosted its quarterly profit by almost 33 percent to $5.4 billion. The six largest Wall Street banks reported a combined profit of $47.7 billion in the first quarter of 2026, led by JPMorgan with record trading revenue of $11.6 billion.

Emerging economies and energy-import-dependent economies are particularly vulnerable. The UNDP calculated that just one month of war could push more than four million people in the Arab world into poverty and reduce regional economic output by up to six percent—a loss of $194 billion in a single month. For the Middle East and North Africa, the IMF lowered its growth forecast by 2.8 percentage points to a meager 1.1 percent. Paradoxically, Russia benefited: Higher oil prices and the temporary lifting of US sanctions on Russian oil slightly boosted Moscow's economic growth forecast.

The Golf model under attack: When prosperity becomes vulnerability

The conflict has ruthlessly exposed the structural weaknesses of the Gulf states' economic model. The economies of the Gulf Cooperation Council (GCC) rest on a fragile triad: energy exports through the Strait of Hormuz, imports of food and consumer goods through the same strait, and a tourism model dependent on stability. All three pillars have been shaken simultaneously.

Oxford Economics lowered its GDP growth forecast for the GCC by 1.8 percentage points to 2.6 percent for 2026—particularly the Emirates and Qatar, which suffered from their inability to redirect hydrocarbon exports. By mid-March 2026, at least 10 million fewer barrels of oil per day than usual were available on the markets. The closure of the Strait of Hormuz also impacted imports: around 80 percent of the Gulf states' calorie supply passes through Hormuz, and 70 percent of food imports were disrupted by mid-March 2026. Supermarkets like Lulu Retail began air-freighting basic foodstuffs, leading to price increases of between 40 and 120 percent for staple products.

Vision 2030 in crisis mode: Saudi Arabia's modernization agenda under pressure

For Saudi Arabia, the war strikes at the heart of its long-term development strategy. Crown Prince Mohammed bin Salman's Vision 2030—a gigantic program for economic diversification away from oil, with projects like the futuristic city of NEOM, tourism regions on the Red Sea, and a modern service economy—relies on predictable energy and trade flows. The closure of the Strait of Hormuz, through which the majority of Saudi oil exports flowed before the war, has fundamentally shaken this assumption.

Chatham House analyzed that Saudi Arabia now needs to strategically reorient its export infrastructure toward the Red Sea: The existing pipeline transports around four million barrels per day to Yanbu, but would need to be expanded to seven million barrels per day to reach pre-war levels. At the same time, Riyadh has begun to withdraw its sovereign wealth fund, PIF, from prestige projects—including LIV Gulf and partnerships with the Metropolitan Opera in New York—and concentrate on investments relevant to industrial policy. The gigantic construction projects of Vision 2030 are being scaled back, reduced, or postponed. Saudi Arabia's purchasing managers' index fell to 48.8 points in March, signaling a contraction in economic activity for the first time in a long while, although real GDP still grew by five percent in the fourth quarter of 2025.

The UAE between Tel Aviv and Tehran: Strategic realignment with risks

Through its close military coordination with Israel, the United Arab Emirates has assumed a qualitatively new position in the regional power structure. The deployment of Israeli Iron Dome missile systems on Emirati soil, the joint target selection for strikes against Iran, and the intensive exchange of intelligence effectively created a security axis between Abu Dhabi, Tel Aviv, and Washington. For the UAE, this was a conscious decision: In a war in which Iran fired over 2,800 missiles at Emirati territory alone, the official claim of non-participation remained a political fiction.

The Emirates' strategic calculation is understandable, but costly: Abu Dhabi is seeking a permanently secure regional position alongside the US and Israel—even against Tehran's wishes. This comes at a price. Iran increasingly focused its attacks on the Emirates, which were seen as complicit in the Western-Israeli military alliance. The Stimson Center found that a shifting investment climate in the Emirates significantly contributed to a substantial increase in bankruptcy filings in the first quarter of 2026. At the same time, a rift began to open between Abu Dhabi and Riyadh: Saudi Arabia, which views Israel as a regional destabilizing force, viewed the Emirati rapprochement with Israel with growing suspicion.

Water as an invisible weapon of war: The forgotten humanitarian dimension

Beyond oil prices and trade balance statistics lies an even more threatening weakness of the Gulf model: drinking water supply. In Kuwait, Bahrain, and the UAE, nearly 100 percent of drinking water comes from seawater desalination plants. Around 100 million people in the region depend on this technology. When Iranian drones struck a desalination plant in Bahrain in March 2026, it was more than a military pinprick—it was a demonstration of structural vulnerability. Iran, in turn, accused the US of hitting a desalination plant on the Iranian island of Qeshm, cutting off 30 villages from their water supply.

The Centre for Strategic and International Studies warned that desalination plants in Kuwait and the Emirates are particularly vulnerable. This is due not only to direct attacks, but also to the closure of the Strait of Hormuz itself: Shipping traffic, which delivers chemicals and energy to the energy-intensive desalination plants, used to pass through the same strait, which is now blocked. According to experts, a coordinated attack on the water infrastructure of the Gulf states would trigger a humanitarian catastrophe that no oil reserve or sovereign wealth fund could avert in the short term.

A ceasefire as a respite, not as a solution: The fragile state of limbo

On April 7, 2026, a ceasefire brokered by Pakistan between the US and Iran came into effect. Two weeks later, US President Donald Trump extended the ceasefire, but made it contingent on the reopening of the Strait of Hormuz. Despite the ceasefire, however, the strait remained largely closed to normal shipping due to a combination of US and Iranian naval blockades and ongoing uncertainty. Even in mid-May 2026, after almost six weeks of the ceasefire, diplomats and analysts had been unable to develop a reliable prospect for peace.

In mid-April 2026, Brent crude oil was still trading above $100 and fluctuated between $88 and $108 in the following weeks. The Economist noted that there was little maritime activity passing through Hormuz and that the economic recovery of the Gulf states was stalled because a lasting solution was still pending. The IMF warned that even in the best-case scenario—a swift end to the war—the price of oil in 2026 would still be 21.4 percent higher than the previous year. The reality of a ceasefire without genuine peace is hardly less economically damaging than open warfare itself—because investors, traders, and shipping companies price in structural uncertainty with permanent risk premiums.

The new order in the Gulf: What remains of the old regional architecture?

The war has permanently altered the foundations of the regional security order in the Gulf. The 2023 rapprochement process between Saudi Arabia and Iran, brokered by China and leading to a formal normalization of relations and a Houthi ceasefire in Yemen, lies in ruins. Instead, a new pattern has emerged: Gulf states are acting independently militarily—covertly, but effectively—while simultaneously seeking bilateral channels of communication to limit escalation. This is a pragmatic solution, but one that is highly unstable.

Ali Vaez of the International Crisis Group aptly described the Saudi-Iranian dynamic: not trust, but the shared interest in limiting uncontrollable escalation formed the basis of the informal de-escalation agreement. The Carnegie Endowment analyzed three possible post-war scenarios for the Gulf states: a fragile status quo with latent tension, a new regional security architecture under US leadership, or a lasting fragmentation of the GCC model. The likelihood of a rapid return to pre-war normalcy is low—the mutual losses are too deep, the economic restructuring triggered by the crisis too massive.

Saudi Arabia's security policy is undergoing a learning process. Former Saudi intelligence chief Prince Turki al-Faisal succinctly captured the kingdom's dilemma in a commentary: when Iran and others attempted to drag the kingdom into the "furnace of destruction," the leadership endured the pain of a neighbor to protect the lives and property of its citizens. This balancing act between vulnerability and restraint, between assertiveness and de-escalation, will shape Riyadh's strategic thinking for years to come—and with it, the economic future of a region whose prosperity rests on a global energy system that has just been shaken to its core.

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