Fitch Ratings has reported that most Gulf Cooperation Council (GCC) sovereigns under its coverage have demonstrated notable resilience amid the ongoing geopolitical tensions following the outbreak of conflict between the United States and Iran.
However, the agency cautioned that any renewed escalation or prolonged disruption to economic activity could significantly test this resilience and place additional pressure on credit profiles compared to current conditions.
The ratings agency highlighted Kuwait as the strongest sovereign in the region from a balance-sheet perspective, citing its exceptional financial position and substantial sovereign assets.
Fitch noted that Kuwait holds the highest net sovereign foreign assets among all countries it rates, equivalent to roughly 12 years of government spending based on 2025 expenditure levels, reports Al-Rai daily.
This strong fiscal buffer, combined with low public debt, underpins Kuwait’s “AA-” credit rating with a stable outlook, reinforcing its capacity to absorb external shocks.
Despite this strength, Fitch pointed to structural vulnerabilities, particularly Kuwait’s heavy reliance on the oil sector and its limited export diversification routes beyond the Strait of Hormuz.
Any sustained disruption to this critical passage could temporarily impact fiscal performance until normal flows resume.
Regionally, Fitch placed the sovereign ratings of Qatar (“AA”) and Ras Al Khaimah (“A+”) on negative watch in late March and early April, citing potential economic and security-related pressures linked to the conflict and disruptions in maritime routes.
The agency noted that despite expectations of a shorter conflict, hostilities continued beyond March, prolonging uncertainty around the Strait of Hormuz. Nevertheless, most GCC sovereign ratings remained unchanged, reflecting a degree of financial resilience across the region.
Oman was identified as the least exposed GCC economy due to its limited dependence on Hormuz transit routes, with higher oil prices supporting improved fiscal and growth projections.
Meanwhile, Saudi Arabia and the United Arab Emirates benefited from alternative pipeline export routes, allowing them to sustain hydrocarbon revenues despite temporary disruptions.
Fitch also noted that Bahrain remains the lowest-rated GCC sovereign, though its credit profile continues to be supported by strong financial backing from Gulf partners, including a swap line arrangement with the UAE worth approximately $5.3 billion.
Looking ahead, the agency warned that risks remain elevated, particularly if there is further escalation leading to damage to energy infrastructure, prolonged closure of key shipping routes, or wider regional destabilization.
Such developments could have lasting implications for fiscal strength, diversification efforts, and sovereign credit fundamentals across the GCC.
