The collapse of the interim peace deal between the US and Iran is delaying any recovery in crucial economic sectors for Gulf countries, including aviation, energy, tourism, and real estate. Regional airlines have mostly recovered to pre-conflict capacity levels, but the EU’s aviation watchdog issued a fresh warning advising airlines to avoid airspace over much of the region. With travelers describing tense waits at airports amid missile alerts on their phones this week, it means international carriers — and many tourists — are unlikely to make a comeback soon. Meanwhile, the US has again closed its embassy in the UAE, and oil and gas exports through the Strait of Hormuz are at a standstill.
Analysts had expected a quick rebound if the ceasefire proved durable, but the collapse of the interim deal and a renewed battle for Hormuz could extend the economic pain into next year.