When Iran struck US military sites in Bahrain and Kuwait this week, the missiles were aimed at American forces. But the damage will be felt across the entire Gulf region.
The renewed escalation began after President Donald Trump declared the US-Iran ceasefire “over” during the NATO summit in Ankara on July 8. “To me, I think it’s over,” Trump told reporters. “I don’t want to deal with them anymore. They’re scum.”
Hours later, Iran’s Islamic Revolutionary Guard Corps launched coordinated missile and drone strikes against the US Navy’s Fifth Fleet headquarters in Bahrain and the Ali Al Salem Air Base in Kuwait, which hosts American helicopter squadrons. Kuwait confirmed it had intercepted “two hostile ballistic missiles and 13 hostile drones.” Bahrain reported damage to a residential building near the international airport.
The US responded with fresh strikes on Iranian positions. Trump said the US “hit them very hard last night” and threatened to “probably hit them hard again tonight.”
A war nobody in the Gulf wanted
The Gulf states have spent months trying to stay out of a conflict between the US and Iran. They have not succeeded.
When Iran closed the Strait of Hormuz in March 2026, the impact was immediate. About 20 percent of the world’s oil supply moves through the strait. The disruption was the largest in global oil market history, according to the International Energy Agency. Brent crude surged from about $60 a barrel in January to a peak above $118 in April.
Gulf producers lost 6.7 million barrels per day within the first week of the closure. The losses eventually exceeded 10 million barrels per day.
Bahrain was hit hardest. The small island kingdom relies almost entirely on imports for food and water. Its desalination plants, which provide 99 percent of drinking water, became potential targets. The UAE provided a $5.4 billion currency swap to keep Bahrain’s economy from collapsing.
Qatar’s fate was worse. Iran struck the Ras Laffan liquefied natural gas complex on March 18, causing a 17 percent loss of production capacity. Repairs are expected to take three to five years. Asian LNG spot prices surged more than 140 percent.
Consumer prices across the Gulf rose 40 to 120 percent. Emirates, Etihad, and Qatar Airways suspended operations. More than 4,000 flights were canceled daily during the peak of the conflict. The 2026 Bahrain and Saudi Formula One grands prix were canceled.
The United Nations Development Programme estimated the war could reduce Arab nations’ GDP by $120 billion to $194 billion.
The ceasefire that was not
In mid-June, the US and Iran signed a memorandum of understanding that appeared to open the Strait of Hormuz again. Oil prices dropped about $4 on the news. The deal was fragile, and everyone knew it.
It took less than a month to collapse. Iran attacked three commercial vessels in the strait, including a Qatari LNG tanker. The US Treasury revoked its sanctions waiver for Iranian oil sales, restoring penalties that had been suspended under the MOU. The cycle of strikes and retaliation resumed.
At the NATO summit, Trump’s language went beyond his usual bluster. He called Iranian leaders “scum,” “liars,” and “loco.” He threatened to strike Iran’s civilian infrastructure, including electric plants and desalination plants. By the time the summit closed, the final communique contained only a single line about Iran, a sign that even America’s allies were unwilling to endorse the escalation.
What comes next
If the pattern of the last four months holds, both sides will trade strikes, the strait will become dangerous for commercial shipping, and oil prices will climb again. Goldman Sachs sees $130 per barrel in a sustained disruption. JPMorgan forecasts $100 to $150.
For the Gulf states, the arithmetic is brutal. They depend on the strait for their oil exports, their food imports, and their desalinated water. They have no way to defend themselves against a conflict between their security guarantor and their neighbor. And the current escalation shows no sign of slowing down.
Trump said the ceasefire is over. For the Gulf, that sentence alone may cost hundreds of billions of dollars.