Given the long list of Saudi Arabia’s grievances against the Iranian leadership that have accumulated over decades, many are asking: Why is the Kingdom supporting diplomatic efforts to end a war that may succeed in limiting a bitter adversary? It is a valid question, but the answer is complex.
Immediately after the success of the Iranian Revolution in 1979, and in the decades since, Tehran has sought to undermine the Kingdom’s security and stability. To this end, it established terrorist movements that sought to inflame sectarian divisions, attacked oil facilities, and assaulted security forces; some of these movements even called for parts of the Kingdom to secede and come under Iranian control.
Yet, all those desperate attempts failed. Saudi Arabia safeguarded its security and stability, and development indicators rose at an unprecedented pace. The size of its economy has grown more than tenfold, from $112 billion in 1979 to more than $1.2 trillion today. Iran, in contrast, chose to live by its own rules, rejecting the international norms governing relations between states and becoming a pariah that invested its wealth on terrorist and separatist groups, fueling the fires of discord and hatred in neighboring countries.
Despite this history, Saudi Arabia opposed the war before it broke out, and is now seeking to end it as quickly as possible. This position fits into an approach that Saudi Arabia had begun taking years ago, when Riyadh emphasized the need for political solutions to intractable issues, such as the Arab-Israeli conflict and the Yemen crisis, thereby seeking to bring disputes with Iran down to zero. Riyadh still believes in political solutions, but Iran’s recent attacks demand new terms of reference for such a solution.
It has been over 100 days since the war began on February 28, and the objectives set by US President Donald Trump remain elusive. Some of these objectives now seem even farther from reach than they had been before the war. The ceasefire was announced over 60 days ago, on April 8, but the war continues, albeit at a slower pace.
The fate of the international economy, and with it the livelihoods and prosperity of billions of people around the world, now hinges on the reopening of the Strait of Hormuz. The strait has been closed for more than 100 days, and this closure could continue for some time because of the widening gap between the warring parties.
In addition to the Kingdom’s principled position in support of political solutions, the war- the resulting closure of the Strait of Hormuz in particular- has shaken the Gulf, Arab, and indeed global economy as a whole, including dozens of poor and fragile countries that may not be able to withstand a prolonged closure of the strait.
This conflict shows how closely interconnected “regional” and “international” developments have become. The Gulf is integrated into the international system because the goods it exports drive the global economy, and this conflict is also a clear example of the intersection between what is called geopolitics and geoeconomics, demonstrating the impact of economic factors on political and strategic conditions.
The crisis has directly hit the economies of the Gulf Cooperation Council states. Last October, the International Monetary Fund had been optimistic, predicting that some of these countries would grow at a rate of over 6 percent in 2026. Now, by contrast, it expects the economies of some GCC states to contract by a rate that may exceed 8 percent this year- a figure the Gulf has not seen in decades.
The negative repercussions on the Gulf economy are not due to the decline or halt in exports alone. Iran’s attacks have caused immense visible and invisible damage: the lost opportunities resulting from the postponement or cancellation of investment decisions.
The decline in exports has negatively affected state revenues, but most GCC countries have accumulated wealth over the past years, allowing them to absorb the current crisis and maintain the living standards and prosperity of their citizens. However, this is not available to dozens of countries around the world that do not possess such savings.
Before the crisis, around 13 million barrels of oil and 140 billion cubic meters of natural gas passed through the Strait of Hormuz every day. The Arabian Gulf was the source of 20 percent of the world’s fertilizer supplies, and 46 percent of urea alone. The reduction in fuel and fertilizer supplies has thus begun to negatively affect agricultural production worldwide, and this will worsen as the strait remains closed.
Industry has similarly been hit by the reduction in Gulf exports of essential materials such as aluminum, iron, sulfur, and methanol. Qatar alone, for example, provided around one-third of the world’s helium needs for advanced medical uses and the manufacture of electronic chips before the closure of the strait.
The International Monetary Fund recalculated its forecasts for the global economy accordingly. At the beginning of the year, it had expected growth of 3.4 percent in 2026, due to signs of recovery from the economic war between the United States and China, the world’s two largest economies. After the Iran war and the closure of Hormuz, the Fund revised its forecast downward: projecting that global growth for 2026 would decline by 40 percent if the strait remains closed until the end of the year. It also expected inflation to rise to an average of 6 percent globally. In other words, it has warned of “stagflation:” a disastrous situation we have not seen since the global financial crisis of 2008–2009.
The Kingdom is not the country most affected by the closure of the strait. Its alternative outlets through the Red Sea and its network of land routes have softened the blow. Nonetheless, must remember that the Saudi economy flourishes when the international economy grows, because the volume of its exports depends on the level of global demand for those exports.
On the other hand, many countries depend on the economic support provided by the Kingdom, and declining revenues undermine its ability to provide that support. For this reason, reopening the strait would have a positive impact on global growth and on the Kingdom’s exports. More importantly, it would allow Saudi Arabia to resume its pursuit of stability and economic prosperity for itself and for neighboring countries.
