AI Summary
5 min readZiad Daoud Explains How War with Iran Will Reshape the Gulf
In late February 2026, a war erupted between Israel and Iran that the US intervened in—and that the Gulf states had spent months trying to prevent. Ziad Daoud, chief emerging markets economist at Bloomberg Economics, had been canceling trips and bracing for conflict every weekend since January. But even he was surprised by the retaliation: Iran hit infrastructure in the UAE directly, not just Saudi Arabia or Israel. "For them," Daoud says of Gulf leaders, "it's probably their worst nightmare."
The Security Umbrella That Didn't Open
The Gulf states had lobbied hard to avoid this outcome. They hosted Trump on his first planned foreign trip of his second term, pumped far more oil than markets expected (against their own economic interests), and pledged trillions in US investments. "They gave all of this," Daoud notes, "and I think they wanted one thing, which is basically no regional war, because they thought they'd be caught in the crossfire." Trump visited three Gulf states in May 2025. A month later, war broke out. Four months after that, Israel bombed Doha.
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What you'll learn
- 1 Timestamped Outline
- 2 (02:02) **Introducing the Topic: How War with Iran Reshapes the Gulf** - Tracy and Joe set up the episode's scope: the war's impact on energy, capital, living standards, and trade in the Gulf region.
- 3 (06:04) **The War Was Expected, But Felt Differently** - Ziad explains that while analysts anticipated conflict, the visceral experience of living through it was unprecedented.
- 4 (08:16) **Gulf Leaders' Worst Nightmare: Betrayed by Trump** - Ziad explains how UAE and Saudi leaders tried to appease Trump to avoid war, but he chose Israel's interests instead.
- 5 (10:26) **The US Security Umbrella: Military vs. Political Reliability** - Ziad distinguishes between US military equipment (which performed well) and the political will to protect Gulf allies (which failed).
- 6 (15:35) **Intra-Gulf Rifts: Three or Four Sides Emerging** - Ziad describes how the Gulf states are fragmenting into competing blocs with different visions for dealing with the US, Israel, and regional powers.
- 7 (19:11) **Economic Competition: Everyone Trying to Diversify the Same Way** - Tracy asks whether all Gulf states can successfully pursue identical diversification strategies simultaneously.
+ Full timestamped outline available in the app
Show Notes
Regardless of whether the war with Iran continues, it seems likely to have a lasting impact on the Gulf states. They may have to rebuild damaged pipelines and other infrastructure, or create new ones that bypass the Strait of Hormuz. They might have to spend more money on their own defense, or intensify a push to diversify their economies away from oil. New political alliances may be formed, and old ones could fall apart. In this episode, we bring back Ziad Daoud, chief emerging markets economist at Bloomberg Economics, to discuss the many ways the war could impact the region for years to come.
Read more:
Gulf Airspace Disruptions From Iran War Hits Seychelles Tourism
Bankers Start Weighing UAE Return Hours After US-Iran Ceasefire
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