The Strait of Hormuz, a narrow waterway that handles roughly 20% of global oil and LNG flows, has become the conflict’s economic ground zero. Disruptions along this corridor have hammered energy exports for Saudi Arabia, the UAE, and their neighbors, slashing the fiscal surpluses that once made Gulf sovereign wealth funds the envy of the investing world.

A region’s finances under siege

With the Strait of Hormuz facing conflict-related closures, revenue streams are under direct threat. Reduced export capacity means smaller budget surpluses, which means less capital available for the sovereign wealth funds that have been quietly reshaping global finance for years.

Gulf states are now expected to reduce investment…