The 100-day-long Iran war has failed to affect the credit profiles of the Gulf Cooperation Council (GCC) issuers, stated the rating agency S&P Global.
The agency, in its base-case scenario, assumes disruptions in the Strait of Hormuz will ease in the second half of 2026, but with “possible periodic interruptions and a slower, less complete recovery in flows than previously expected.”
“The longer disruptions persist, the broader and more entrenched the credit effects are likely to become as buffers erode and tighter financing conditions increasingly take effect,” the S&P report stated further.
Despite the ongoing conflict between Iran and the United States showing no immediate signs of ending, S&P said negative rating actions in the GCC have been limited to specific corporate and infrastructure entities, including within Dubai’s real estate and hospitality sectors, and projects directly affected by military attacks.
“Ratings on GCC sovereigns remain resilient, supported by the high oil price environment, alternative export routes for some, and significant accumulated liquid assets. Likewise, GCC banks’ credit profiles are underpinned by resilient performance and solid capital buffers,” S&P remarked.
“Domestic funding outflows will remain manageable for GCC banks, given their strong liquidity and expected support from central banks and governments. Consequently, the impact on corporate issuers is more pronounced due to a weakening business environment and dampened economic growth prospects,” it added further.
However, S&P still sees a high degree of unpredictability regarding the duration and scale of the Iran war and its potential effects on commodity prices, supply chains, economies, and credit conditions.
While S&P Global didn’t see the conflict having a large-scale impact on GCC-based issuers’ credit profiles, Fitch Ratings foreshadowed “significant risks” potentially triggering broader rating downgrades across the Middle East region.
“The persistence of significant risks around the conflict that, if crystallized, could lead to broader rating downgrades,” Fitch said in its latest report, which was released on May 28.
While the Iran war and the disruption at the Strait of Hormuz have already prompted Fitch to raise its 2026 base-case Brent crude oil price assumption to USD 87 per barrel from USD 70 previously. The revision is based on expectations that the Strait of Hormuz will begin reopening around July after remaining effectively closed for about five months.
Before the conflict, the waterway carried around 15 million barrels of crude oil per day and five million barrels of oil products, accounting for 20% of global oil consumption, as well as a significant share of global LNG and fertilizer shipments. As per Fitch, “supply-chain disruptions have been compounded by damage to Qatar’s LNG infrastructure and volatile funding conditions across the region.”
“In an adverse scenario, where flows through the strait do not return to near-normal levels until late in the third quarter or early in the fourth quarter, oil prices could average around USD 100 per barrel in 2026,” the rating agency stated further.