A coordinated diplomatic push by the UAE, Saudi Arabia, and Qatar aims to prevent a repeat of the recent conflict that shuttered the Strait of Hormuz and sent a shockwave through the global economy.
Leaders from the United Arab Emirates, Saudi Arabia, and Qatar have launched a coordinated diplomatic effort to persuade the US to pursue negotiations with Iran, a rare alignment among the Gulf allies driven by fears of another devastating economic conflict. The joint pressure reflects deep concerns that a second round of military action would once again shut down the Strait of Hormuz, a chokepoint for a fifth of the world’s oil.
“I worry that the Iranians always over-negotiate. I hope they don’t do it this time because the region really needs a political solution,” Anwar Gargash, a senior diplomatic adviser to the UAE president, said on Friday, placing the odds of a deal at “five-five.” “A second round of military confrontation will only complicate things even more.”
The previous closure demonstrated the scale of the disruption. The strait handles 20 million barrels of oil per day and 80 million tonnes of LNG annually, with 84 percent of crude flows destined for Asia. The shutdown sent the Nikkei 225 down eight percent and the KOSPI over 11 percent in the conflict's initial weeks. The impact on non-belligerent importers like Jordan was catastrophic, with a projected GDP loss of 6.35 percent over 180 days as its tourism sector collapsed and energy costs soared.
The Gulf states’ diplomatic offensive is a direct attempt to avoid repeating that economic shock. While they remain divided on the ideal terms of a final deal, they are united in pressing Washington to de-escalate. The core issue at stake is whether the fragile, Pakistan-mediated talks can solidify before pressure from hawks in Israel and elsewhere convinces the US to resume military action.
From Hawk to Dove: UAE's Costly Lesson
The UAE’s shift from a leading hawk to a vocal proponent of peace shows how deeply the recent conflict scarred the region’s economies. After US-Israeli strikes on Iran on February 28, the UAE’s president, Sheikh Mohamed bin Zayed, initially pushed for a collective Gulf counter-attack, only to be rebuffed by Saudi Arabia and other neighbors.
Choosing to act alone, the UAE paid a heavy price. The conflict battered its aviation, tourism, and real estate markets, triggering widespread layoffs and damaging its reputation as a stable international finance hub. The threat became direct when a drone, attributed to an Iran-backed Iraqi militia, struck one of the UAE's nuclear power plants. According to Dina Esfandiary, an analyst at Bloomberg Economics, Gulf Arab states were “caught in the middle of the US-Iran war and have absorbed most of the shocks.”
A Tale of Two Blockades
The current situation remains tense, with what analysts describe as a dual blockade: Iran restricting passage from within the Gulf while a US-led naval blockade cuts off Iran’s own ports. Transit volumes remain at just five percent of pre-war levels.
The primary hope for a breakthrough rests with a Pakistan-brokered diplomatic effort. Leaked details of a near-final draft agreement in late May sparked a brief but massive relief rally, adding an estimated $500 billion to US equity values in 30 minutes as WTI crude slid nearly three percent. The reported terms included an immediate ceasefire, freedom of navigation in the Strait of Hormuz, and a gradual lifting of sanctions tied to compliance.
However, that optimism remains fragile. Skeptics suggest the leaked draft may have been a propaganda push to influence markets, with some rumors indicating talks remain deadlocked. The push for diplomacy from the Gulf continues as they weigh the potential for a peace dividend against the certainty of economic pain from another conflict.
This article is for informational purposes only and does not constitute investment advice.
