Middle East sovereign ratings resilient to short conflict: Fitch

Thursday, 5 March 2026 04:03 - - {{hitsCtrl.values.hits}}

Middle Eastern sovereign credit ratings broadly have sufficient buffers to withstand a short regional conflict, provided hostilities do not escalate or cause lasting damage to energy infrastructure, according to Fitch Ratings.

The rating agency said attacks launched by Israel and the US on Iran on 28 February have had a stronger impact than earlier tensions in June 2025, but its baseline scenario assumes the conflict will last less than a month. The duration is expected to depend on the scale of damage to Iran’s military capabilities and Washington’s reluctance to enter a prolonged conflict.

Fitch noted that disruption to Gulf energy export infrastructure would be the most significant channel for sovereign rating pressure. Although limited damage has been reported so far, it is not part of the agency’s central scenario. The Strait of Hormuz, through which more than 20 million barrels per day of crude and refined products normally pass, is assumed to remain effectively closed during the conflict.

Saudi Arabia and the UAE retain pipeline capacity to bypass the strait, while major exporters also maintain overseas oil storage, offering partial buffers.

Fitch expects a temporary slowdown in non-oil sectors such as tourism, aviation and consumer activity. However, it warned that a prolonged conflict could trigger deeper economic disruptions and potential rating downgrades, particularly for Israel, which already carries a Negative Outlook.