Gulf

1. Bracing for Iran’s response
2. Jet fuel prices surge
3. Stranded or staycation?
4. New wealth management firm
5. Bahrain shuts crowdfunder
6. Oman approves income tax

A new orchestra in town.

Stocks are up and oil is down, a sign that investors view the US strikes on Iran’s nuclear sites as either a one-off, or a step toward diplomacy. On the flip side, Japan’s top banks are evacuating staff from the Gulf, while European investment funds are canceling trips to the region.

In Dubai, however, there is just an eerie calm.

Traffic at DIFC is the bane of bankers, and fodder for headlines, but I had a smooth ride into the financial district today. I asked workers if it was unusually quiet, and they gave banal explanations that foreigners in Dubai use to avoid political commentary — long weekend coming (it’s four days away), school’s out (it isn’t) — before admitting their worry: What if this escalates, and they get stuck?

Rajesh Khanna, CEO of Wealthbrix Capital Partners (which he launched today), said the UAE has demonstrated its “resilience” and pointed to the market reaction as an indicator of sentiment. He expects the country to keep attracting millionaires and their money.

Gulf states are calling for calm. They are in the line of fire if Iran decides to strike US bases across their territory. The stakes are high: Any disruption in the region’s waterways — especially the Strait of Hormuz, which carries all the energy exports of Iran, Iraq, Kuwait, and Qatar, as well as significant volumes from Saudi Arabia and the UAE — could plunge the global economy into recession. A worst case for the region is radiation contaminating the Gulf’s only water source.

The likely path is a calibrated Iranian response intended to ensure regime survival. In that scenario, Gulf countries may face short-term investment pauses and consumer jitters, with higher oil revenues offsetting some of the pain.

It’s impossible to make a call on what the 86-year-old supreme Iranian leader — who lost most of his closest advisers and possibly his decades-long nuclear project — will decide. So far, the smart money is still in the market, but the owners of the wealth may be moving themselves, and their families, somewhere safer.

Gulf leaders push for restraint

As Iran, the US, and Israel weigh their next moves, Gulf states are reiterating what they see as the only viable path: de-escalation. Most have stopped short of condemning Washington for joining Israeli strikes on Iran — with Oman the exception, calling the US action an “illegal aggression.” Iranian officials are hinting at closing the Strait of Hormuz, a threat Tehran has made many times before, but never followed through on. Oil prices fell on Monday, but crude is still trading at around $75 a barrel, reflecting a risk premium, and could surge past $100 a barrel if the waterway is blocked.

With the region bracing for Iran’s response, diplomacy is shifting into high gear. Saudi Crown Prince Mohammed bin Salman held separate calls with all Gulf leaders, as well as with France and Italy on Sunday, while others had similar discussions. Regional criticism of Israel’s 10-day offensive is intensifying: Anwar Gargash, diplomatic adviser to the UAE president, called Israel’s finance minister an “extremist” for requesting that Gulf and European countries fund Israel’s war on Iran.

Airline fuel demand slumps

The decline in regional demand for jet fuel since the Iran-Israel war began, as airlines cancel flights and travelers postpone trips. Demand from civilian aircraft fell from 550,000 barrels a day before the conflict to around 480,000 now, according to S&P Global. There are around 1,500 fewer flights a day, and it is not just warring countries that are affected. Airlines have suspended flights to Iraq, the Levant, and Russia rather than re-route them around the danger zone, which would take longer and be more costly to operate.

For the planes still taking off, airlines are having to swallow higher prices, with the cost of jet fuel up from $79.43 a barrel before the war to $86.40 as of June 20. There’s an upside for oil companies though: Even as civilian aviation slows, demand from military aircraft is up.

Canceled flights? How about a staycation?

Gulf News has found the local angle: “Will UAE residents turn to staycations as Iran-Israel conflict disrupts summer travel plans?” The headline over the weekend captured what is preoccupying some expats, who are often sanguine in the face of instability right in their own backyard, living as they do in a place that ranks at the top of world’s-safest lists, and who, as a group, over-index on employing the hashtag “wanderlust.”

The Dubai newspaper queried hoteliers, who reported a small uptick in interest from domestic travelers, but no “trend” just yet. The story comes as travel disruptions affect Dubai Airport — the world’s busiest travel hub — and with the UAE’s annual summer exodus to home countries and cooler climes underway. British Airways has paused flights to Dubai and Doha; Air Canada and United Airlines have also canceled flights to Dubai.

— Kelsey Warner

Dubai bankers launch new firm

A group of veteran Dubai bankers launched Wealthbrix Capital Partners to cater to the city’s growing millionaire population. Based in the DIFC, the firm will offer private wealth, asset management, and corporate finance services to what it calls “Mid-Tier Millionaires” — clients with $5 million to $30 million in investable assets — and the ultra-rich above that threshold.

Wealthbrix is betting on Dubai’s ascent as a global finance hub. The city is the fastest-growing offshore wealth jurisdiction, its CEO said, calling it the “capital of private capital,” a play on the far richer Abu Dhabi’s claim as the “capital of capital.” Wealthbrix aims to manage $7 billion in assets by 2030.

— Mohammed Sergie

Bahrain shutters troubled crowdfunder

The Central Bank of Bahrain has taken over troubled crowdfunding platform Safaghat. The regulator took the step after a “thorough investigation” into unspecified violations. Safaghat pooled investors’ money into loans to local startups, with the promise of high returns. However, there have been complaints from investors this year about those promised returns not materializing. In May, the company posted on Instagram about a “misappropriation of funds recently uncovered.” The central bank had launched an investigation into the company in February, a month after barring it from bringing in new investors.

Safaghat was first licensed in 2022, having graduated from the central bank’s regulatory sandbox. Among the deals it signed in subsequent years was one with the government’s Labour Fund (Tamkeen) to support micro, small, and medium-sized enterprises.

Oman plans Gulf’s first income tax

Oman will be the first Gulf country to impose a personal income tax. People earning more than 42,000 Omani rials ($109,000) a year will be levied a 5% tax, starting in 2028. Gulf governments have been raising revenue through fees, value-added tax, and other measures over the past decade to reduce their reliance on oil exports. Half of them will post deficits this year, with breakeven oil prices for the region above $80 a barrel — BNP Paribas expects this pressure to persist through 2026. Omani officials say the tax will affect only 1% of the population and will exclude spending on housing, health care, and education.

Government

• The UAE reshuffled its cabinet as it looks to further rev non-oil foreign investments, forming a new Ministry of Foreign Trade, under Minister of State for Foreign Trade Dr. Thani Al Zeyoudi. He previously worked out of the Ministry of Economy, which also got a rebrand, now going by the Ministry of Economy and Tourism.
• Saudi Arabia is tightening its border. A nationwide crackdown on illegal residents led to 7,238 deportations last week, a sixth of whom were Yemenis and Ethiopians. — Saudi Gazette

Energy

• The trend toward international expansion continues with QatarEnergy. The gas producer has won an exploration licence for Algeria’s onshore Ahara Block in partnership with France’s TotalEnergies and local energy champion Sonatrach. — The Peninsula

Real Estate

• Qatar wants in on the revival of Egypt. The country is in talks over a possible $3.5 billion investment in a tourism project on the Mediterranean coast, following the UAE into major real estate investments in the Middle East’s most populous country. — Bloomberg

Tech

• Californian autonomous vehicle company Applied Intuition secured cash from Qatar Investment Authority and Abu Dhabi Investment Council in a $600 million funding round co-led by BlackRock-managed funds and valuing the business at $15 billion.

The city that’s become a global playground for the rich aims to place itself more firmly on the cultural stage by launching the Dubai Orchestra. “Music remains one of humanity’s most enduring forms of connection,” said Dubai Culture & Arts Authority chairperson Sheikha Latifa bint Mohammed Al Maktoum, a daughter of the emirate’s ruler.

The move may deepen a friendly rivalry with Abu Dhabi. Last year, the federal authorities announced plans for a UAE National Orchestra, to be based in the capital. For musicians, the competing orchestras are good news. Both ensembles will seek to recruit local as well as international talent; Dubai aims for at least half of its members to be Emiratis by 2033.

In March, SAP became Europe’s most highly valued company, having leapfrogged the likes of Novo Nordisk, LVMH, and ASML.

Its market capitalization is still just one-tenth that of Microsoft’s, and Novo has been jostling for the European lead again. But, as SAP CEO Christian Klein told Semafor’s Andrew Edgecliffe-Johnson, the company’s success shows legacy tech companies can still dominate in the disruptive era of cloud computing and artificial intelligence.