...Sovereign ratings in the Middle East and North Africa (MENA) have so far been resilient to the US- Iran war. Countries in the Gulf Cooperation Council (GCC) and Iraq have borne the brunt of the conflict, facing sporadic attacks from Iran and regional proxies and disruption to the main route for their hydrocarbon exports. However, higher oil prices, reviving oil exports (via pipelines and shuttling) and large buffers have supported sovereign credit profiles. Fitch Ratings' base case is that some form of durable deal to re-open the Strait of Hormuz will be achieved around 1Q27. Lower oil production will cause double-digit real GDP falls in Bahrain, Kuwait and Qatar. Non-oil growth will also fall in most of the GCC, due to disruption to downstream and other export industries, weaker consumer and business sentiment and lower tourist arrivals. Oman is the exception, with oil export facilities outside of the strait and greater use of its logistical facilities. Reduced oil revenue will worsen...
