Middle Eastern sovereign ratings have sufficient headroom to withstand a short regional conflict, but prolonged hostilities or significant damage to energy infrastructure could pose risks, Fitch Ratings warned in an email note on March 3 after the launch of Operation Epic Fury on February 28.

The ratings agency said its baseline assumption was that the conflict triggered by attacks launched by Israel and the US on Iran would last less than a month. However, it cautioned that the situation remained highly uncertain. US President Donald Trump has also said that he would like the campaign to last not more than four weeks although other analysts have speculated it could last longer.

“Middle Eastern sovereign ratings generally have sufficient headroom to withstand a short regional conflict that does not escalate further,” Fitch said. “However, the course of the conflict is uncertain and lasting damage to key energy infrastructure or protracted hostilities could pose risks to regional sovereign ratings.”

Fitch said the latest strikes had already had a greater impact than those of June 2025. It expects the duration of the conflict to be shaped by factors including “the destruction of Iranian military capacity and US aversion to a longer, more involved conflict”, while warning that “attacks by Iran and its proxies across the region will continue and could intensify over the short term”.

The agency identified material damage to Gulf Co-operation Council energy export infrastructure as the most likely channel for ratings pressure. While only limited damage has been reported so far, Fitch’s baseline assumes the Strait of Hormuz will be “effectively closed for the duration of the conflict”, whether through physical blockage, insurance constraints or other security threats. More than 20mn barrels a day of crude and refined products, as well as significant LNG volumes, transit the waterway.

Saudi Arabia and the United Arab Emirates have western pointing pipeline capacity to the Red Sea to bypass Hormuz, although of limited capacity, and major exporters hold storage outside the region. Nonetheless, Bahrain, Kuwait and Qatar lack alternative routes, while Iraq’s exports are heavily reliant on the strait.

“Higher energy prices would mitigate the impact of a short-lived disruption on export earnings, to the extent that shipments still get out,” Fitch said.

Beyond hydrocarbons, Fitch expects a near-term hit to non-oil activity, citing suspended air travel, weaker consumer demand and potential damage to tourism. While most GCC sovereigns hold substantial financial assets to cushion short-term revenue shocks, Israel faces more limited headroom at its A rating with a Negative Outlook.

“An extended regional conflict, particularly involving major mobilisation of reservists, could still cause a downgrade,” Fitch said. “Our base case is subject to particularly high uncertainty,” the agency added, noting that a prolonged disruption to exports or shifts in Iran’s political trajectory could carry negative or positive rating implications.