Gulf Monarchies Could Become 'Expendable' if Iran Conflict Continues

Russian economist Alexey Zubets warned that investors should consider abandoning the UAE dirham if the conflict in the Middle East drags on, arguing that the Gulf monarchies could become vulnerable in a prolonged regional crisis.

Photo: commons.wikimedia.org by Robert Bock, https://creativecommons.org/publicdomain/zero/1.0/

Dubai

Warning Over Investments in UAE Dirham

The director of the Center for Social Economy Research, Alexey Zubets, advised against holding savings in the UAE dirham, a currency that has recently gained popularity among Russians.

"People should exit dirhams for obvious reasons,” Zubets said in comments cited by Govorit Moskva.

According to the economist, if military confrontation in the Middle East continues, the region's economies could face serious challenges.

"The Gulf monarchies could simply be sacrificed — sacrificed by Donald Trump, sacrificed by Iran. They may turn out to be unnecessary at this celebration of American life,” Zubets suggested.

Dirham Popularity in Russia

The UAE dirham is pegged to the US dollar and has gained popularity in Russia in recent years. Due to restrictions on the use of Western currencies, the dirham has risen to become the fourth most popular foreign currency in Russia, after the US dollar, the euro, and the Chinese yuan.

Analysts previously described the dirham as a "new dollar” that appeared safer from sanctions and geopolitical risks.

Currency Stability Despite Regional Tensions

Despite rising tensions in the region, including reports of strikes on infrastructure in Dubai and disruptions in hydrocarbon supplies, the dirham exchange rate has remained relatively stable.

On March 2 the currency traded at 21.09 rubles, while by March 10 it had risen slightly to 21.33 rubles.

Oil Market Shock from Hormuz Strait Crisis

Meanwhile, the oil market faces growing uncertainty amid reports that Iran has blocked shipping through the Strait of Hormuz.

Analysts have described the situation as the largest supply shock in the history of the global oil market. Experts warn that even releasing hundreds of millions of barrels of oil from the strategic reserves of the G7 countries may not be enough to offset the disruption.