Gulf Q2 earnings to reveal Iran war’s uneven toll

Companies across the Gulf region are beginning to report second-quarter earnings this week, offering investors the clearest picture yet of how the four-month war with Iran reshaped the region's economy — even as fresh U.S.-Iran strikes threaten to unravel the fragile peace deal signed in June.

A Mixed Picture by Sector and Geography

Banks and real estate firms are most exposed to the conflict's fallout, with Gulf banks forecast to post single-digit declines in second-quarter profits from the previous three months, according to Elena Sanchez-Cabezudo, head of financials equity research at EFG Hermes. Lower fee income linked to weaker trade finance and reduced credit card spending on international travel are among the key drags. Telecoms, by contrast, were sheltered by long-term contracts and relatively inflexible demand.straitstimes+3

Energy companies face a more nuanced outlook. The closure of the Strait of Hormuz disrupted supply, but elevated prices provided a buffer. HSBC ↘ 1.35% raised its 2026 Brent crude forecast to $95 a barrel in May, estimating second-quarter average prices of $114. Saudi Arabia fared better than its neighbors by routing exports via its Red Sea pipeline, and is now considering expanding that pipeline's capacity by up to 2 million barrels per day, Reuters reported. The UAE, Qatar, and Kuwait — more reliant on the Strait — face sharper contractions, with Qatar's GDP estimated to have tumbled roughly 16% quarter-on-quarter and Kuwait's by about 12%, according to Moody's Analytics.thestandard+3

Ceasefire Under Threat

The earnings season arrives against a backdrop of renewed escalation. On Wednesday, U.S. Central Command said it struck approximately 90 Iranian military targets after Iran attacked three commercial vessels in the Strait of Hormuz, prompting retaliatory Iranian strikes on Kuwait and Bahrain. President Trump said at the NATO summit in Ankara that the ceasefire was "over," though he added that negotiations would continue.nytimes+2

Persistent Risk Premium

The latest hostilities have reinforced the geopolitical risk premium on Gulf assets that analysts warned would linger even after the June memorandum of understanding paused the fighting. Saudi Arabia's crude exports had begun normalizing, approaching pre-war levels of 6.3 million barrels per day in early July, according to Bloomberg tanker-tracking data. Whether that recovery can hold now depends on what comes next between Washington and Tehran.bloomberg+1