Luxury hotels in Dubai and Bahrain were struck by Iranian missiles and drones on Saturday, injuring dozens and prompting a warning to Americans in Bahrain to avoid hotels, as a wider conflict escalates following joint U.S.-Israeli operations against Iran. The attacks, which targeted civilian areas and U.S. Allied countries, have rattled the Gulf region and raised concerns about the security of critical infrastructure and global energy supplies.
The Iranian strikes began in the wake of a U.S.-Israeli operation aimed at dismantling Iran’s nuclear program and the subsequent death of Supreme Leader Ali Khamenei. According to the UAE Ministry of Defense, more than 100 missiles and 500 drones were launched into the country, with debris from intercepted missiles causing fires at the Burj Al Arab and minor damage to Dubai International Airport. At least three people were killed and 58 injured in the UAE, the ministry reported. Footage circulating on social media showed explosions at the Palm Jumeirah area in Dubai.
In Bahrain, the U.S. Embassy issued a statement on X warning Americans that hotels might be targets for future attacks after the Crowne Plaza Hotel in Manama was reportedly struck, resulting in injuries. The embassy advised U.S. Citizens to avoid hotels in the capital city. Explosions were also reported in Jordan and Kuwait, according to earlier reports.
The attacks have prompted immediate disruption to travel and commerce. Flights have been grounded, leaving tourists stranded and expatriates seeking shelter. Insurers have cancelled policies on ships moving through the Strait of Hormuz, citing war risk exclusions, with premiums expected to soar by as much as 50% when the market reopens. The Strait, a vital chokepoint for global oil supplies, is now a focal point of concern.
While Iran possesses the world’s fourth-largest crude oil reserves, its oil industry has suffered from underinvestment due to international sanctions, accounting for less than 3% of the current global supply, according to the International Energy Authority. However, the potential closure of the Strait of Hormuz, through which oil from Iraq, Kuwait, Saudi Arabia, and the UAE is transported, poses a catastrophic risk to global energy prices and could trigger rapid inflation.
The immediate impact on financial markets is anticipated to be significant. Analysts expect gold and silver prices to rise, while equity markets may tumble. Defence stocks are predicted to perform well. Investment decisions are likely to be postponed as investors assess the evolving situation. Oil prices have already climbed $10 a barrel since the start of the year in anticipation of escalating tensions, and further increases are expected.
China, a major customer of Iranian oil, receives shipments via “dark” tankers that transfer their cargo to Chinese vessels off the coast of Malaysia, circumventing the embargo. However, the broader consequences of the U.S.-Israel strikes and the death of Ayatollah Khamenei are likely to be far-reaching, potentially emboldening other actors and disrupting regional stability.
The U.S. And Israeli governments have not yet commented on the possibility of further military action. The situation remains fluid, with the potential for escalation or de-escalation dependent on a complex interplay of factors, including the formation of a fresh Iranian government and the continued flow of oil through the Strait of Hormuz.
