Iran Conflict Raises Risks for Asian Banks' Record Lending in Gulf Region

Asian and Chinese banks extended a record $15 billion in loans to the Gulf in 2025, mainly to Saudi Arabia and the UAE, supporting energy and infrastructure projects. However, escalating conflict involving Iran, the US, and Israel has raised concerns over potential financial risks and disrupted capital flows. While some banks are reassessing exposure and pausing deals, the situation's impact depends on the conflict's severity. The tensions also threaten Saudi Arabia's economic reforms and the UAE's infrastructure plans reliant on foreign investment.