Iran Conflict Threatens Gulf States' Multi-Trillion-Dollar US Investment Plans

Vessels in the Strait of Hormuz, as seen from Musandam, Oman, on August 3, 2026, highlight the region's tense maritime routes. According to a new analysis from the Peterson Institute for International Economics (PIIE), the ongoing conflict between the United States and Iran could make it significantly harder for Saudi Arabia, Qatar, and the United Arab Emirates to fulfill nearly $4 trillion in economic commitments to the US announced under President Donald Trump’s “America First” agenda.

The 15-page report released on Monday indicates that these Gulf states face mounting economic pressure stemming from the US and Israel’s war on Iran, necessitating increased spending on defense, energy infrastructure, and trade. The report notes that the conflict has weakened their fiscal positions and growth prospects, potentially leaving lasting marks on their economic models while also eroding confidence in the US security umbrella in the Gulf.

The analysis stresses that the war has impacted Gulf economies far more severely than the global economy as a whole. While the International Monetary Fund (IMF) trimmed its 2026 global growth forecast by 0.3 percentage points, the downward revisions for the Gulf were much steeper. The IMF cut Qatar’s growth forecast by 14.7 percentage points down to 8.6 percent, while Saudi Arabia’s projection dropped from 4.5 percent to 1.7 percent, and the UAE's forecast was similarly reduced from 5.6 percent to 1.7 percent.

Although Gulf governments retain sufficient financial assets and borrowing capacity to avert an immediate funding crisis, PIIE warns that economic pressures may drive these nations to prioritize domestic spending over US investments. The report points out that Saudi Arabia had already initiated a rebalancing act toward domestic investment prior to the war, a shift that the conflict appears to have accelerated. Over the past six years leading to 2026, Saudi Arabia’s Public Investment Fund reduced its international investment portfolio share from 30 percent in 2020 down to 20 percent.

Furthermore, the PIIE report cautions that any delays in executing these investment promises might trigger additional pressure from the White House, which has previously leveraged tariffs to compel adherence. In January 2026, President Trump threatened higher tariffs on South Korean goods following legislative delays regarding their US investment agreement. Similar frustrations over South Korea's implementation pace were reportedly tied to a US decision to scale back joint military exercises there, though recent progress has emerged, with The Wall Street Journal reporting that Seoul is nearing a $100bn+ energy investment deal to bolster US artificial intelligence infrastructure.

In parallel, Qatar continues advancing its US energy sector investments. QatarEnergy initiated liquefied natural gas (LNG) production at a Texas facility in March, launching exports the following month. Furthermore, QatarEnergy seeks to expand ties with US entities, currently negotiating contracts through 2031 with several US LNG producers to compensate for capacity lost from Iranian attacks on Qatari LNG facilities, as reported by Reuters.

On the political front, the PIIE report highlights that vague definitions, timelines, and measurement metrics for these investment commitments could complicate tracking fulfillment. Lawmakers have also subjected the deals to intense scrutiny. The report notes that US congressional members have raised concerns regarding national security, economic impacts, governance, and potential conflicts of interest tied to Gulf investments.

A primary example cited is a $2bn investment in Binance by a UAE-backed investment firm utilizing a stablecoin issued by World Liberty Financial, a cryptocurrency firm connected to the Trump family. This transaction prompted Senators Elizabeth Warren of Massachusetts and Jeff Merkley of Oregon to request records in June 2025 due to financial tie concerns. By October 2025, President Trump pardoned Binance founder Changpeng Zhao, who had pleaded guilty in 2023 to violating US anti-money-laundering laws. Additionally, across US media, lawmakers have questioned the involvement of sovereign wealth funds from Saudi Arabia, the UAE, and Qatar in financing major US corporate deals, such as Paramount Skydance’s proposed acquisition of Warner Bros Discovery, the parent company of CNN. The PIIE report concludes that the central question moving forward is whether, and in what capacity, these three nations will ultimately implement their pledges.