MAYS IBRAHIM (ABU DHABI)
The UAE is among GCC countries best positioned to withstand a prolonged disruption in regional energy shipments through the Strait of Hormuz, according to Fitch Ratings.
Its oil export capacity should double to around 3.6 million barrels per day once a second pipeline bypassing the Strait becomes operational in the second quarter of 2027, the rating agency said in its latest assessment report.
Combined with higher oil prices, the additional capacity could push the UAE’s fiscal and export revenues above pre-war levels, Fitch said.
The UAE’s strong sovereign balance sheet is also cited as a key factor supporting its credit resilience. The UAE is rated “AA-” with a Stable Outlook, while Abu Dhabi is rated “AA” with a Stable Outlook.
However, Fitch warned that a hypothetical scenario in which Hormuz traffic remains disrupted through most of 2027 could put downward pressure on the credit profiles of some GCC sovereigns and issuers.
Oman is least exposed to the impact on hydrocarbon sales because its output does not need to pass through the Strait.
Countries more dependent on exports through the Strait, including Qatar, Kuwait and Bahrain, face greater exposure because they lack alternative export routes that could be developed quickly enough to operate in 2027.
The impact could extend beyond energy markets. Fitch said a prolonged conflict could deter foreign investment, weaken non-energy sectors and encourage population outflows, particularly among expatriates.
Dubai’s real estate market is among the areas Fitch said should be closely monitored. A significant correction in Dubai property values under an extended-conflict scenario could put pressure on some UAE banks’ asset quality, particularly smaller lenders with higher real estate exposure.
Fitch nevertheless expects most investment-grade GCC corporates to remain resilient, supported by strong liquidity and credit profiles. It said higher oil, gas, metals and fertiliser prices, along with alternative export routes and efforts to strengthen infrastructure resilience, are supporting major regional natural resources companies, including ADNOC-linked entities.
UAE and Saudi national oil companies could face higher capital spending as they strengthen their ability to withstand prolonged disruptions, but their strong financial profiles and liquidity should limit rating pressure from such spending in the coming years.
The duration and intensity of the conflict remain key factors determining the extent of the credit risks facing the region, according to Fitch.