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  Conflict duration will determine impact on aviation sector

  6 March 2026

  The Middle East’s aviation and travel sectors are grappling with the fallout following the 28 February military actions involving the US, Israel and Iran, and subsequent retaliatory strikes.

  According to a 5 March report by Fitch Ratings, the duration of this disruption will be the key factor in determining the financial and operational impact on airlines, airports and the broader hospitality industry. While the current baseline suggests the conflict may last less than a month – limiting the damage to rated issuers – the scale of the immediate disruption is unprecedented for the region’s aviation hubs.

  Between 28 February and 5 March, more than 15,000 flights were cancelled across seven major regional airports, affecting over 1.5 million passengers. Major international hubs, including Dubai, Abu Dhabi and Doha, have faced significant congestion and scheduling challenges as carriers scramble to reroute or divert services.

  The impact is most acute for carriers whose primary hubs are located within the affected corridor. “Flight operations over the UAE and Qatar appear particularly constrained, which is important given the scale of the region’s hub carriers’ operations,” said Fitch.

  Airlines are facing a sharp spike in operating costs. Rerouting around restricted airspace often requires longer flight paths, additional technical stops, and increased expenses for crew overtime and passenger handling. While passenger compensation may be limited because the conflict is classified as an event outside the airlines’ control, the cost of issuing refunds, vouchers and accommodation remains a burden on balance sheets.

  Another challenge is higher fuel prices, which is a perennial risk for the industry during Middle East instability. Fitch said most of the region’s carriers have maintained a disciplined approach to risk management with hedge levels for the next three months ranging from 50% to over 80%, providing a significant buffer against immediate price volatility.

  The insurance market is also seeing shifts. Aviation policies typically grant insurers the right to cancel cover during active conflict. “War cover would typically relate to aircraft damage, although business interruption policies usually exclude war risks,” said Fitch.

  The broader outlook for regional travel remains resilient. Global lodging companies with exposure to the Middle East are generally well-diversified enough to absorb the impact of travel disruptions. Similarly, aircraft lessors – supported by globally diversified fleets and long-term, fixed-rate lease contracts – face very limited credit risk.

  For the region’s major aviation players, the focus now is on how quickly the safe haven status of the Gulf’s primary hubs can be restored. If the conflict remains short-lived, the impact on annual growth and profitability is expected to be temporary.

  A prolonged period of airspace instability would test the flexibility of the region’s transport infrastructure at a time when aviation remains a central pillar of the GCC’s economic diversification strategy.

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  READ THE MARCH 2026 MEED BUSINESS REVIEW – click here to view PDF

  Riyadh urges private sector to take greater role; Chemical players look to spend rationally; Economic uptick lends confidence to Cairo’s reforms.

  Distributed to senior decision-makers in the region and around the world, the March 2026 edition of MEED Business Review includes:

  > AGENDA: Saudi Arabia’s private sector picks up the baton > RAMADAN: Data disproves the Ramadan slowdown story > INDUSTRY REPORT: Chemicals producers look to cut spending > INDUSTRY REPORT: Global petrochemical project capex set to rise until 2030 > MARKET FOCUS: Egypt’s crisis mode gives way to cautious revival > LEADERSHIP: Delivering Saudi Arabia’s next phase of rail growth > POWER: Lessons learnt from a power plant decommissioning > INTERVIEW: Abu Dhabi’s Enersol charts acquisitions path > INTERVIEW: Lina Noureddin, CEO of Lamar Holding, on the evolving PPP landscape > INTERVIEW: Contract award marks Metito’s return to municipal projects

  To see previous issues of MEED Business Review, please click here

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  Colin Foreman
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  GCC banks show resilience amid regional conflict

  5 March 2026

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  The GCC’s banking sector is facing its most significant test in years following the attacks by Israel and the US on Iran, and the subsequent strikes launched by Iran on all six GCC states.

  The data so far indicates that the region’s finances are holding firm. “Fitch believes GCC sovereign ratings generally have sufficient headroom to withstand a short regional conflict that does not escalate significantly further, including in most cases substantial assets that provide a buffer against short-term hydrocarbon revenue disruption,” it said in a report on 3 March.

  In the UAE, the Central Bank of the UAE (CBUAE) issued a statement on 5 March saying that the nation’s banking and financial sector continues to operate normally. It said the UAE’s banking assets now exceed AED5.42tn ($1.48tn), supported by a capital adequacy ratio of 17% and a liquidity coverage ratio of 146.6%, adding that both figures sit comfortably above international regulatory requirements.

  “The UAE’s banking and financial sector continues to maintain very strong levels of capital adequacy and liquidity … reflecting the scale, resilience and strength of financial institutions operating in the country,” said Khaled Mohamed Balama, governor of the CBUAE.

  While the immediate financial metrics are sound, the broader operating environment is not without its challenges. Fitch notes that the attacks raise risks to the 2026 baseline, which had previously assumed robust non-oil growth driven by the region’s massive pipeline of diversification projects.

  Economic impact

  The conflict has already impacted the real economy. Air travel suspensions, a slowdown in consumer activity and shifting risk perceptions regarding tourism could weigh on non-oil GDP if the tension lingers. Fitch highlighted that the key metric to monitor will be the “strength of operating conditions, particularly non-oil growth and general confidence in the region”.

  The critical variable remains the duration of the conflict. If hostilities are contained within a month – as is the current expectation among analysts – the impact on GCC economic growth is likely to be temporary.

  There are specific regional nuances to watch. While most GCC banks enjoy ample liquidity, those in Qatar and Saudi Arabia have historically faced tighter conditions. “The conflict could make it more challenging for GCC-based entities to issue debt in overseas capital markets. This could particularly increase Saudi banks’ reliance on more expensive domestic markets,” said Fitch. 

  For now, the strategy from both regulators and ratings agencies is one of cautious optimism. The region’s capital expenditure programmes and diversification drives provide a structural momentum that is difficult to derail in the short term.

  Fitch concluded that as long as energy infrastructure remains intact and public spending continues to shore up growth, the GCC’s financial institutions are well-positioned to navigate the crisis.

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  READ THE MARCH 2026 MEED BUSINESS REVIEW – click here to view PDF

  Riyadh urges private sector to take greater role; Chemical players look to spend rationally; Economic uptick lends confidence to Cairo’s reforms.

  Distributed to senior decision-makers in the region and around the world, the March 2026 edition of MEED Business Review includes:

  > AGENDA: Saudi Arabia’s private sector picks up the baton > RAMADAN: Data disproves the Ramadan slowdown story > INDUSTRY REPORT: Chemicals producers look to cut spending > INDUSTRY REPORT: Global petrochemical project capex set to rise until 2030 > MARKET FOCUS: Egypt’s crisis mode gives way to cautious revival > LEADERSHIP: Delivering Saudi Arabia’s next phase of rail growth > POWER: Lessons learnt from a power plant decommissioning > INTERVIEW: Abu Dhabi’s Enersol charts acquisitions path > INTERVIEW: Lina Noureddin, CEO of Lamar Holding, on the evolving PPP landscape > INTERVIEW: Contract award marks Metito’s return to municipal projects

  To see previous issues of MEED Business Review, please click here

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  Colin Foreman
• 
  Fitch Ratings sees limited oil price impact of Iran conflict

  5 March 2026

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  The de facto blockade of the Strait of Hormuz in the Gulf by Iran since 28 February is likely to be temporary given its vital economic role in global oil trade, according to credit ratings agency Fitch Ratings.

  This, alongside global oil market oversupply, should limit oil price rises and mitigate any potential disruptions to Iranian oil supply, Fitch Ratings said in a note.

  As a result, the ratings agency does not expect significant upside to its December 2025 assumption of an average Brent oil price of $63 a barrel for 2026.

  “The strait is not formally closed, but vessels are increasingly avoiding it given the risk of attack by Iran or its proxies. Oil majors have halted shipments for safety reasons, and insurers are cancelling war risk cover for vessels. However, we expect this effective closure of the strait to be temporary. It is a vital artery for seaborne oil transportation, with limited alternative routes,” said Angelina Valavina, EMEA head of Natural Resources and Commodities at Fitch Ratings.

  Oil prices rose on 5 March, extending a rally as the ‌escalating US-Israeli war with Iran continued to disrupt supplies, prompting some major producers to cut production and others to take measures to ensure supply security.

  Brent crude was up $2.35, or 2.9%, at $83.75 a barrel at 12pm Gulf Standard Time, a fifth session of gains. US ​West Texas Intermediate crude rose $2.42, or 3.2%, to $77.08.

  ALSO READ: Oil prices rise to highest in a year as regional conflict deepens

  “Prior to the conflict, around 20 million barrels a day (b/d) of crude oil and petroleum products transited the strait, accounting for about a quarter of global seaborne oil trade and a fifth of global oil consumption. About half of the oil volumes transported through the strait are exports from Saudi Arabia and the UAE, with the remainder from Iraq, Kuwait and Iran. About half of these exports go to China and India.

  “A protracted closure would affect both exporting and importing countries and therefore is not our baseline assumption. If the strait were to remain effectively closed for a protracted period, naval protection for tanker navigation could be considered, as occurred during the 1980s' Iran-Iraq war,” Valavina said in the note from Fitch Ratings.

  “In addition, the global oil market is oversupplied, which should limit the geopolitical risk premium and cap risks to oil price increases. Global supply growth exceeded demand growth in 2025. Fitch expects this trend to continue in 2026. Supply increased by about 3 million b/d in 2025, while demand grew by well below 1 million b/d,” Valavina said.

  “We forecast supply growth of 2.4 million b/d in 2026, with demand growth of about 0.8 million b/d. Half of 2025-26 supply increases come from unaffected non-Opec+ producers. Opec+ spare production capacity is 4.3 million b/d,” she added.

  “In addition, global observed oil inventories rose by 1.3 million b/d in 2025 to reach their highest level since March 2021. Total global inventories stood at 8.2 billion barrels at end-2025. This is sufficient to cover a halt in oil shipments via the Strait of Hormuz for over 400 days.

  “Saudi Arabia and the UAE have some infrastructure to bypass the strait, which may mitigate transit disruptions. Saudi Aramco (Saudi Arabian Oil Company; A+/Stable) operates the 5 million b/d East–West crude oil pipeline to an export port on the Red Sea. The UAE operates a 1.5 million b/d capacity pipeline linking its oil fields to the Fujairah export terminal on the Gulf of Oman with a maximum achieved flow of 1.8 million b/d.

  “While Iran is a sizeable oil producer, producing about 3.5 million b/d and exporting about 2 million b/d, it accounts only for about 3.5% of global crude oil production. This means that potential supply disruption would be offset by global market oversupply.”

  Valavina concluded: “However, the duration and intensity of the increasingly regional conflict remain uncertain. Any protracted blockage of the strait or material and sustained damage to the region’s oil and gas production and transportation infrastructure would materially affect oil markets and likely result in a more material rise in our base case 2026 oil price assumption. Oil price volatility would rise if there were to be any material disruption to Iranian oil production.”

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  Indrajit Sen
• 
  Alec resumes project operations across the UAE

  5 March 2026

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  UAE-based construction firm Alec has resumed on-site and in-office operations across its UAE projects from 4 March.

  In a statement, the company said that it is working closely with clients to ensure a prompt and safe return to full-scale activity.

  The move follows a temporary work-from-home policy introduced across the company’s UAE operations in response to ongoing events, as Alec Holdings reaffirmed its commitment to protecting its workforce while continuing to deliver in clients’ best interests.

  During the same period, the company said its operations in Saudi Arabia remained fully operational.

  Alec also confirmed it remains on track to hold its first Annual General Assembly meeting post-listing on 24 March, in line with regulatory guidelines.

  Barry Lewis, CEO of Alec Holdings, said the company’s “priority is, and always will be, the safety and security of our workforce”, adding that Alec was grateful to clients for their support.

  “That trust has been built over decades of delivering on our promises, and it is something we value deeply,” he said.

  Lewis added that the company would continue to focus on transparency and close collaboration with clients and partners to maintain safety across sites and offices.

  Lewis also pointed to Alec’s investments in digital collaboration platforms, workforce management systems and enhanced security protocols, describing them as “tried and tested” capabilities that have helped keep projects on track while protecting employees.

  He said the company remained confident in the resilience of its operations and its ability to adapt responsibly as circumstances evolve.

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  READ THE MARCH 2026 MEED BUSINESS REVIEW – click here to view PDF

  Riyadh urges private sector to take greater role; Chemical players look to spend rationally; Economic uptick lends confidence to Cairo’s reforms.

  Distributed to senior decision-makers in the region and around the world, the March 2026 edition of MEED Business Review includes:

  > AGENDA: Saudi Arabia’s private sector picks up the baton > RAMADAN: Data disproves the Ramadan slowdown story > INDUSTRY REPORT: Chemicals producers look to cut spending > INDUSTRY REPORT: Global petrochemical project capex set to rise until 2030 > MARKET FOCUS: Egypt’s crisis mode gives way to cautious revival > LEADERSHIP: Delivering Saudi Arabia’s next phase of rail growth > POWER: Lessons learnt from a power plant decommissioning > INTERVIEW: Abu Dhabi’s Enersol charts acquisitions path > INTERVIEW: Lina Noureddin, CEO of Lamar Holding, on the evolving PPP landscape > INTERVIEW: Contract award marks Metito’s return to municipal projects

  To see previous issues of MEED Business Review, please click here

  https://image.digitalinsightresearch.in/uploads/NewsArticle/15872176/main3704.jpg

  Yasir Iqbal
• 
  QatarEnergy issues force majeure to customers

  5 March 2026

  Register for MEED’s 14-day trial access 

  QatarEnergy has issued force majeure to customers who have been affected by its decision to stop production and shipments of liquefied natural gas (LNG) and associated products.

  “QatarEnergy values its relationships with all of its stakeholders and will continue to communicate the latest available information,” the state enterprise said in a statement on 4 March.

  QatarEnergy announced its decision to halt production of LNG and associated products on 2 March due to military attacks on the company’s operating facilities in Ras Laffan Industrial City and Mesaieed Industrial City in Qatar.

  The following day, the company said it was stopping output of products in the downstream energy value chain, including urea, polymers, methanol, aluminium and other products.

  The state enterprise did not blame Iran for the attacks in either of its statements, but it is understood that its facilities have been hit by drones and/or missiles launched by Tehran, as it retaliates against Israel, the US and their military bases in the GCC states, further escalating the ongoing conflict.

  QatarEnergy currently has a nameplate LNG production capacity of 77.5 million tonnes a year (t/y), with all its processing trains and export infrastructure located in Ras Laffan Industrial City, which lies about 90 kilometres to the north of Doha.

  In Mesaieed Industrial City, situated around 45km south of Doha, QatarEnergy operates crude oil refining facilities, including natural gas liquids (NGL) units, as well as petrochemical production complexes and other units in the hydrocarbon value chain.

  ALSO READ: 

  • Aramco shuts Ras Tanura refinery following drone strike
  • Fujairah oil facility catches fire from drone debris

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  Indrajit Sen