Hormuz closure would cost Gulf states average 3.8% of GDP, Marex warns as Bahrain most exposed

Bahrain, which has no alternative export route, would see its current account swing from a surplus of 3.8% of GDP to a deficit of 3.2%. / bne IntelliNews

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By bne IntelliNews March 10, 2026

A three-month closure of the Strait of Hormuz would inflict an average current account deterioration of 3.8% of GDP across Persian Gulf states, with Bahrain the most vulnerable and Oman the sole clear beneficiary, according to an analysis by commodities and financial services firm Marex.

The note, written by Marex head of GEM strategy Matthew Vogel, models a scenario with oil at $120 per barrel during a three-month supply squeeze, finding that Saudi Arabia and the UAE emerge as relative winners while Iraq, Kuwait, Bahrain and Qatar face the most severe damage.

Bahrain, which has no alternative export route, would see its current account swing from a surplus of 3.8% of GDP to a deficit of 3.2%, while its fiscal deficit would widen from 9.9% to 12.2% of GDP. Kuwait's fiscal surplus would collapse from 4.5% to a deficit of 13.9%, and Qatar's current account surplus would fall from 10.2% to around 2.1%.

Saudi Arabia can divert an estimated 2mn barrels per day through its East-West pipeline to Yanbu on the Red Sea, covering around 35% of exports, while the UAE can route up to 40% of output via the Abu Dhabi Crude Oil Pipeline to Fujairah.

Marex estimates both countries would suffer external and fiscal deterioration of only around 1% of GDP under the diversion scenario.

However, the note cautions that Saudi Red Sea exports face potential threats from Suez closure to the north and Houthi activity near Bab El-Mandeb to the south.

Iraq can divert only around 10% of exports via the Kurdistan Region-Ceyhan corridor, leaving its current account deficit widening to around 7.9% of GDP and its fiscal deficit reaching 13.9%.

Oman, sitting outside the Gulf with full market access and the ability to benefit from freight rerouting through its ports, would see its current account swing from a deficit of 0.7% to a surplus of 6.1% of GDP.

Marex noted that sovereign wealth funds provide a buffer but warned that liquidity constraints could limit their usefulness over an extended closure, and that monetary authorities would need to support local banks. Oil would need to reach $169 per barrel to fully neutralise the current account impact for Saudi Arabia and $155 per barrel for the UAE.