NEED TO KNOW

• Three of four major Gulf economies have begun internal reviews of US investment commitments, per the Financial Times, citing declining energy revenues, disrupted shipping, and rising defense costs
• Gulf sovereign wealth funds hold over $2 trillion in US assets spanning real estate, technology and Treasury bonds — any sustained pullback could rattle American financial markets
• Saudi Arabia, the UAE and Qatar had pledged hundreds of billions in new US investments following Trump's regional visit last year; those pledges are now under review

DUBAI, UAE (TDR) — The US-Israel war on Iran is producing a financial aftershock that American policymakers did not anticipate: the Gulf states that Washington relies on as strategic partners and capital sources are quietly reviewing whether to pull back from investment pledges made to the United States just months ago. The Financial Times first reported the development Thursday, citing a Gulf official who confirmed that three of the region's four largest economies — Saudi Arabia, the United Arab Emirates, Kuwait and Qatar — have initiated internal reviews of existing contracts and future commitments, including whether force majeure clauses can be invoked to exit those agreements without penalty.

What Gulf Sovereign Wealth Funds Actually Hold in the US

To understand the stakes, the scale of Gulf capital in American markets requires context. Gulf sovereign wealth funds collectively hold over $2 trillion in US assets — concentrated in real estate, technology firms, private equity and US Treasury bonds. Saudi Arabia's Public Investment Fund, the UAE's Abu Dhabi Investment Authority, and Qatar Investment Authority are among the largest sovereign investors on the planet. Their capital underpins American infrastructure deals, Silicon Valley funding rounds and, indirectly, US government borrowing costs.

Last year, following President Donald Trump's visit to the region, Saudi Arabia, the UAE and Qatar collectively pledged hundreds of billions of dollars in new US investments — commitments the White House trumpeted as validation of its diplomatic posture in the Middle East. Those same pledges are now under review.

"A number of Gulf countries have begun an internal review to determine whether force majeure clauses can be invoked in current contracts, while also reviewing current and future investment commitments in order to alleviate some of the anticipated economic strain from the current war — especially if the war and related expenses continue at the same pace." — Gulf official, Financial Times

Why Gulf Budgets Are Under Sudden Pressure

The budget strain is real and multidirectional. The Strait of Hormuz closure has halted or severely disrupted the primary export route for Gulf oil and LNG. Qatar declared force majeure on LNG exports after Iranian drone strikes damaged its Ras Laffan facility — representing a direct hit to roughly 20% of global LNG supply. Saudi Arabia's largest oil refinery was struck. Iranian missiles and drones have hit ports in Dubai and Oman, data centers in the UAE operated by Amazon and other US technology firms, airports and hotels.

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The Gulf official who spoke to the FT itemized the four budget pressures driving the review: reduced energy income from disrupted production and shipping, sharp declines in tourism and aviation revenue, and a spike in defense spending as Gulf militaries intercept Iranian missiles and drones at scale. The UAE alone reportedly intercepted 165 ballistic missiles, two cruise missiles, and 541 drones over a single weekend, according to Rest of World.

"The budget strains these countries are facing [are] due to reduced income from energy, due to the slowdown in output or the inability to ship, [and from] the tourism and aviation sectors, in addition to the increase in defence spending." — Gulf official, Financial Times

QatarEnergy CEO Saad al-Kaabi offered a stark regional forecast.

"Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure. If this war continues for a few weeks, GDP growth around the world will be impacted." — Saad al-Kaabi, QatarEnergy CEO, Financial Times

Washington Is Watching — and So Is the Market

An adviser to a Gulf government confirmed to the Financial Times that the prospect of an investment pullback had already drawn attention inside the White House. The implicit message is difficult to miss: the financial leverage flows both ways. Gulf states cannot easily absorb a full unwinding of their US positions without self-inflicted losses, but a visible slowdown in new commitments — or a public invocation of force majeure on existing contracts — would carry significant diplomatic and market signal value.

Secretary of State Marco Rubio announced plans to stabilize oil markets through increased US domestic production and coordination with allies, though analysts note that American supply cannot quickly offset the volume of Gulf exports currently disrupted.

The frustration in the Gulf is also going public. Prominent Emirati businessman Khalaf al-Habtoor addressed Trump directly on social media, invoking the billions Gulf states contributed to Trump's Gaza rebuilding plan.

"His Excellency President Donald Trump, a direct question: Who gave you the authority to drag our region into a war with Iran? Did you calculate the collateral damage before pulling the trigger? Are we funding peace initiatives or funding a war that exposes us to danger?" — Khalaf al-Habtoor, Emirati businessman

The Carnegie Endowment for International Peace noted that Gulf states had broadly prioritized diplomacy with Iran since a 2023 Saudi-Iran rapprochement, and that each GCC government had tried to publicly distance itself from the US-Israeli operation before the strikes began. Qatar had mediated a ceasefire between the parties as recently as last summer. Oman's foreign minister made a last-minute appeal for diplomacy on US television in the hours before Operation Epic Fury launched.

"Citizens are also likely to wonder why they should bear the risk of hosting US forces when the United States is unable or unwilling to protect the Gulf from Iranian attacks." — Carnegie Endowment for International Peace analysis

The Strategic Bind

The review remains, for now, precautionary. Gulf governments have not announced formal withdrawals, and the FT noted that Reuters was unable to independently verify the report. But the structural dynamic is clear: Washington asked its Gulf partners to host US forces, absorb Iranian retaliation, watch their energy revenues collapse and their infrastructure burn — while the investment pledges those same partners made to the US sit in limbo.

Whether a war launched without Gulf consent can be ended without Gulf financial pressure — and whether the White House recognized that leverage existed before it did — may be the question that shapes the next phase of this conflict more than any military development.

Sources

This report was compiled using information from the Financial Times via reporting by The Express Tribune, Siasat, Dunya News/Reuters, and Asian Mail, geopolitical analysis from the Carnegie Endowment for International Peace, energy and infrastructure reporting by Rest of World and Kpler, and market context from LN24 International.

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