Logo ofMoody’s
Credit rating agency Moody’s said that Saudi Arabia and the UAE have partial alternatives to the Strait of Hormuz for oil exports via pipelines, but they do not fully compensate for the entire volume of exports. 
In a report, Moody’s added that Bahrain, Kuwait, Qatar, and Iraq will likely face financial pressure as a result of their dependence on the Strait for exports, although the pressure will be less on Qatar, Kuwait, and Abu Dhabi because they have large financial reserves in case the closure of the Strait is temporary.
The base case scenario assumes that the conflict will be relatively short, likely lasting weeks, and that navigation through the Strait of Hormuz will resume thereafter, and that this scenario is unlikely to have a significant credit impact, according to the report.
Moody’s also indicated that any prolonged disruption in the Strait of Hormuz would lead to a sustained rise in oil prices, deepen global risk aversion, and likely generate greater pressure on credit spreads in high-yield bond markets.
It noted that such a scenario would increase refinancing risks for issuers with short maturities, particularly in energy-intensive and cyclical industries that already face high costs, and would complicate the path of interest rates and central bank decisions.
Additionally, the entities operating in infrastructure, particularly those associated with pipelines, LNG facilities, or energy-related transportation in the region, may face operational risks. Several project financing structures leverage strong force majeure clauses that mitigate short-term cash flow impacts even in the event of physical damage, said the report.
It highlighted that airlines, tourism, and logistics companies will also face increased pressure as air restrictions, travel hesitancy, and operational disruptions escalate, particularly in Gulf hubs such as Dubai, Doha, and Manama.
Moody’s also noted that the closure of the Strait of Hormuz will be credit negative for UAE ports, as it will disrupt trade flows and reduce volumes, particularly for Jebel Ali Port and Khalifa Port, owned by Abu Dhabi Ports, which rely on the Strait as their sole maritime access point. However, their geographical diversity will help mitigate the impact.
Logo ofMoody’s
Credit rating agency Moody’s said that Saudi Arabia and the UAE have partial alternatives to the Strait of Hormuz for oil exports via pipelines, but they do not fully compensate for the entire volume of exports.
In a report, Moody’s added that Bahrain, Kuwait, Qatar, and Iraq will likely face financial pressure as a result of their dependence on the Strait for exports, although the pressure will be less on Qatar, Kuwait, and Abu Dhabi because they have large financial reserves in case the closure of the Strait is temporary.
The base case scenario assumes that the conflict will be relatively short, likely lasting weeks, and that navigation through the Strait of Hormuz will resume thereafter, and that this scenario is unlikely to have a significant credit impact, according to the report.
Moody’s also indicated that any prolonged disruption in the Strait of Hormuz would lead to a sustained rise in oil prices, deepen global risk aversion, and likely generate greater pressure on credit spreads in high-yield bond markets.
It noted that such a scenario would increase refinancing risks for issuers with short maturities, particularly in energy-intensive and cyclical industries that already face high costs, and would complicate the path of interest rates and central bank decisions.
Additionally, the entities operating in infrastructure, particularly those associated with pipelines, LNG facilities, or energy-related transportation in the region, may face operational risks. Several project financing structures leverage strong force majeure clauses that mitigate short-term cash flow impacts even in the event of physical damage, said the report.
It highlighted that airlines, tourism, and logistics companies will also face increased pressure as air restrictions, travel hesitancy, and operational disruptions escalate, particularly in Gulf hubs such as Dubai, Doha, and Manama.
Moody’s also noted that the closure of the Strait of Hormuz will be credit negative for UAE ports, as it will disrupt trade flows and reduce volumes, particularly for Jebel Ali Port and Khalifa Port, owned by Abu Dhabi Ports, which rely on the Strait as their sole maritime access point. However, their geographical diversity will help mitigate the impact.
