Counting the fiscal cost to the Gulf from the Iran war

The disruption to energy flows from the Iran war will cause government budget balances to improve in Oman and the UAE (high prices have more than offset the impact on export volumes). But balances will probably deteriorate by ~2% of GDP in Saudi Arabia, ~5% of GDP in Kuwait and Bahrain and as much as 10% of GDP in Qatar this year versus last. Bahrain aside, governments have ample scope to finance shortfalls. But the scale of the hit suggests that the authorities won’t loosen fiscal policy to support recoveries.