Business as Usual? The Israel-Iran Conflict and What It Means for Trade and Investment in the Gulf

This is not the first time I have found myself contemplating the impact of Middle East strife on international business.

In 1990, I flew from Dubai to Salt Lake City for a WordPerfect Global Distributor event, arriving on the very day Iraq invaded Kuwait and the Gulf War began. Middle East air travel was restricted immediately, the event was canceled, and — somewhat ironically — the UAE and Saudi distributors were already on the ground in Utah with no flight home. Since then, I have been witness to the wars in Iraq and Afghanistan, and numerous other regional military conflicts, and their cascading impact on international business.

What follows is my perspective on the current Israel-Iran conflict — drawn from over 30 years of living within the Middle East's geopolitical landscape, specifically through the lens of Saudi Arabia and the United Arab Emirates, and what it means for trade and investment.

Both the UAE and Saudi Arabia will project a business-as-usual posture, and deliberately so. Each has invested heavily in economic diversification, and both are acutely aware that their international development partners need confidence, not uncertainty. The UAE has evolved its relationship with the US from a defense-driven alliance into a broad economic partnership — evidenced most recently by President Trump's visit and the announcement of landmark investments in sustainable energy and artificial intelligence. Saudi Arabia, meanwhile, is aggressively courting international tourism and business through mega-projects, world-class sporting events, and major conferences. The UAE already holds its place on the global destination bucket list. In both countries, security and stability are not just priorities — they are the product.

The risk, however, is real. Should the US enter the conflict directly, Iran has pledged to retaliate against military installations in both Saudi Arabia and the UAE, and to target oil supply infrastructure — a capability it demonstrated in 2019 and again in 2022. Any military escalation across the Strait of Hormuz would impede the international flow of oil and disrupt the global supply chain. When oil prices spike, the global economy feels it.

American businesses — particularly small and medium-sized enterprises — tend to be spooked quickly when regional conflicts flare. Having lived overseas for many years, I am well acquainted with the contrast between US media coverage, which trends toward alarm, and the on-the-ground reality in the Gulf. A contact in the UAE put it simply this morning: "It's normal." The expectation, broadly shared across the region, is that this too will pass.

Normal or not, conflicts and the mere threat of conflict fuel economic volatility. That volatility, compounded by pre-existing uncertainty around US tariff policy, will require more than a pro-business attitude to keep international confidence intact. The counterweight is significant, however — the scale of recent Saudi and UAE financial commitments to the US is substantial enough to raise a pointed question: can either side actually afford to let geopolitics derail what has become a deeply interconnected economic relationship?

I think not.