In the latest episode of our “Clarity in Credit” podcast series, Arnaud Journois, Senior Vice President of European Financial Institution Ratings, and Eric Chan, Vice President of Global Non-Bank Financial Institutions, discuss the repercussions of the war in Iran on sovereigns and airlines with Adriana Alvarado, Senior Vice President of Global Financial Institution and Sovereign Ratings and Rohit Kumar, Vice President of Corporate Ratings.

The recent escalation of conflict in the Middle East, including widespread airspace closures and disruptions around the Strait of Hormuz, is reshaping sovereign and corporate risk across the region. Our analysts look at the immediate and longer‑term implications for regional economies and global aviation and discuss how the different sectors are navigating this evolving landscape.

KEY HIGHLIGHTS

• Gulf sovereigns face heightened geopolitical and economic uncertainty, with impacts differing across oil‑dependent and more diversified economies.
• Airspace closures across Iran, Iraq, the Gulf states, and Israel triggered severe aviation disruptions, particularly for Middle Eastern carriers whose operations temporarily came to a halt.
• Airlines outside the region have been more resilient, as Middle Eastern routes represent a smaller share of their networks, though rerouting challenges persist.
• With Russian airspace already restricted, additional Middle Eastern closures create a “double bottleneck,” leading to longer flight times, higher fuel burn, and rising operating costs.
• Fuel prices represent the biggest global risk: sustained increases in oil and jet fuel costs could pressure profitability, especially for airlines with limited hedging.
• Longer‑term credit implications vary, with Gulf sovereigns relying on substantial financial buffers while airlines’ resilience depends on hedging strategies, liquidity strength, and revenue diversification.

RELATED RESEARCH 

• Most Global Airlines Can Withstand Direct Impact From Middle East Airspace Closure, but Fuel Price Poses Risk, (March 2, 2026), https://dbrs.morningstar.com/research/475508 
• Conflict in the Middle East Brings Economic Disruptions for the Gulf Countries and Beyond (March 2, 2026),  https://dbrs.morningstar.com/research/475494

Catch up on these topics and more thought leadership from across the Fundamental Ratings teams and around the globe via our monthly Consider Credit newsletter: https://dbrs.morningstar.com/research/475929.

By downloading or listening to this podcast, you are agreeing to the Morningstar DBRS disclaimer and legal terms and conditions found at https://dbrs.morningstar.com/about/disclaimer and https://dbrs.morningstar.com/about/termsAndConditions, including that the information provided is not investment, financial or other advice. Morningstar DBRS will not be liable for losses arising from your use of the information. Please note that the content of this podcast is intended for European, North American and UK audiences only.