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Crude oil production across seven OPEC+ members bordering the Strait of Hormuz fell to 14.6 million barrels per day in April, a decline of about 40 percent from February levels, according to PwC Middle East’s May 2026 Economy Watch report. The IMF now projects GCC GDP to expand by 1.8 percent this year while the aggregate fiscal balance shifts to a deficit of 1.4 percent of GDP. Saudi Arabia’s first-quarter GDP grew 2.8 percent year on year even as output contracted 1.5 percent quarter on quarter, driven by a 7.2 percent drop in oil sector activity, the PwC assessment found.
A PwC Middle East report noted that economies with alternative export routes and stronger non-oil bases are better equipped to handle the pressure on energy exports and trade flows. Louis Detata, founder of UEXO.com, told Arabian Business that current tensions and the closure of the Strait of Hormuz have strongly affected supply chains in the region and disrupted maritime flows. Detata added that Oman, Saudi Arabia and the UAE could continue to see growth despite the conditions because of Oman’s position outside the strait, Saudi access to Red Sea ports and the UAE’s pipeline infrastructure.
Saudi Arabia is expected to maintain expansion through 2026 and 2027 supported by Vision 2030 investments, according to Detata. The kingdom’s Red Sea export options limit the impact of Gulf waterway constraints and preserve momentum in spending programs. Richard Boxshall, partner and chief economist at PwC Middle East, said the crisis has turned resilience into an economic priority for the region, with governments and businesses responding quickly to preserve stability and strengthen critical sectors.
The UAE benefits from a growth model less dependent on energy exports, with tourism, aviation, logistics, financial services, technology and real estate providing multiple channels for recovery, Detata told Arabian Business. Dubai and Abu Dhabi’s roles as business hubs, alongside investments in artificial intelligence, digital infrastructure, advanced manufacturing and clean energy, are shifting the economy toward higher-productivity areas. The UAE’s exit from OPEC+ has reduced the group’s ability to coordinate supply, Ole Hansen, head of commodity strategy at Saxo Bank, stated, potentially leading to larger oil price swings as inventories remain low.
Governments across the GCC have introduced support measures to contain spillover effects, a PwC Middle East review showed. Dubai rolled out a stimulus package worth AED1 billion to aid businesses and tourism, while Bahrain drew on public unemployment funds to cover $249 million in April salaries for private-sector workers. Central banks in Bahrain, Kuwait, Qatar and the UAE cut reserve requirements, adjusted liquidity ratios and expanded facilities, with the UAE and Bahrain also agreeing on a $5.4 billion currency swap to bolster financial stability.
Investment in alternative trade infrastructure is accelerating, according to the PwC report, which placed the 1,700-kilometre GCC Railway at 50 percent completion ahead of its 2030 target and the 238-kilometre Hafeet Rail linking the UAE and Oman at 40 percent. Saudi Arabia has increased cargo train frequencies and launched new intra-GCC shipping routes connecting Dammam with Abu Dhabi and Sharjah. The Habshan-Fujairah Pipeline has enabled the UAE to bypass the Strait for some exports, with plans announced to double its capacity as part of broader efforts to enhance supply-chain resilience.
