Middle East Focus The Gulf’s Geo-Economic Balancing Act
Jul 17, 2025
Karen Young, a Senior Fellow at MEI and a researcher at Columbia's Center on Global Energy Policy, discusses the resilience of the Gulf economies amidst regional conflict and global uncertainty. She delves into the implications of the Israel-Iran war on energy markets and investment strategies. Young also examines the innovative taxation reforms in Oman and the evolving dynamics between Gulf nations and Iran. Finally, she highlights the Gulf's shift towards renewable energy and strategic investments in BRICS countries, showcasing their pivotal role in a changing global economic landscape.
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Gulf Economic Resilience
- Gulf economies are resilient, with non-oil sectors growing steadily around 3-4% despite hydrocarbon contractions.
- GCC states have varied economic strengths, inflation is low, and some are exploring personal income taxes for diversification.
Oil Prices Decouple From Conflict
- Oil prices remain stable despite regional conflict due to well-supplied markets and diversified sources like U.S. shale.
- Israel's economy shows resilience in equity markets and currency strength despite ongoing conflict pressure.
Gulf States' Iran Concerns
- Despite rapprochement efforts, Gulf states remain wary of Iran's aggressive actions like attacks on Qatar's airbase.
- Such conflicts threaten the Gulf's open economy goals essential for tourism, investment, and foreign labor reliance.