GCC Weekly

Research evidence excerpt

GCC Weekly

directed at US military assets and infra- 1.8%oya, unchanged from May and marginally above our

structure rather than the broader-based strikes seen previous- forecast of 1.7%oya. The upside surprise was very limited,

ly. Notably, the UAE—arguably the most affected GCC by however, as headline inflation rose 0.16%m/m, only slightly

previous attack—has been largely spared, while intense above our 0.14%m/m expectation. Relative to our forecast,

attacks have instead been reported in Kuwait, Bahrain as well stronger increases in food prices (+0.7%m/m) was partly off-

as Qatar, Jordan and even Oman. set by softer-than-expected outcomes in restaurants hotels and

miscellaneous goods and services, leaving the overall infla-

A key difference from the March–June conflict is the renewed tion picture broadly in line with expectations.

Yemen dimension, with clashes between the Houthis and Sau-

di-backed forces intensifying and resulting in strikes on Our forecast remains unchanged for headline inflation aver-

Sana’a airport and a retaliatory attack on Abha airport in aging 1.7% in 2026, slowing to 1.4% in 2027.

southwest Saudi Arabia—the first Houthi strike on Saudi ter-

ritory in four years.

Figure 2: Saudi Arabia CPI

%oya Headline CPI CPI ex food, fuel, utilities

Iran has warned that attacks on its energy infrastructure could 8

trigger a closure of the Bab el-Mandeb Strait, off the coast of 6

the Houthis’ controlled area in Yemen, a development that 4

would have significant implications for regional energy 2

exports. The waterway is particularly important for Saudi 0

Arabia, as it provides an outlet for crude transported through -2

the 5mbpd East-West Pipeline to Yanbu on the Red Sea coast. -4

Any disruption would force greater reliance on northern -6