Good morning, lovely people, and welcome back. We’re keeping an eye on how many of you are *actually* back, as many of the people we know who traveled for the Eid break extend their stays abroad as remote work looks set in place for a little while longer.

Schools are also still remote for another two weeks, making it much easier for many families to remain abroad for a little bit as things settle down.

NOT HELPING THINGS- ⛈️WEATHER- The weather forecast this week is giving the people who are abroad more reasons to stay put, and the people who are here more reasons to stay home. The National Center of Meteorology has flagged a stretch of “atmospheric instability” through to Friday, with rain, thunderstorms, and possible hail expected across multiple regions, state news agency Wam reports.

Expect a high of 31°C in Dubai and 28°C in Abu Dhabi, along with lows of 21-22°C accompanied by thunderstorms in the evening.

As if the airlines aren’t suffering enough…: Air Arabia says the weather could impact operations out of Sharjah, Abu Dhabi and Ras Al Khaimah, according to an X post. Flydubai has warned of potential delays and disruptions at Dubai International Airport, Gulf News reports.

We dive into the latest airspace updates along with where the damage was over the long weekend as Iran continued to strike targets across the UAE in today’s War Watch, below.

The big story of the day is positive, though, as markets responded well to the Central Bank of the UAE’s resilience package announced late on Tuesday right before the Eid break began.

ALSO- Beyond the CBUAE’s package, the Federal Tax Authority is introducing several tax incentives — one for R&D spenders, and the other, the Financial Times reports, for expats whose stay in the country was disrupted by the war.

And: We take a look as the war drags on at how it has impacted recruitment patterns in the UAE, with analysts reporting minimal impact — but raising a bigger question for if the war drags on even further.

Plus: The CBUAE held interest rates steady: The Central Bank of the UAE held the Overnight Deposit Facility rate at 3.65%, in line with the US Federal Reserve’s move, according to a statement (pdf). The CBUAE also left short-term borrowing costs unchanged at 50 basis points above the base rate.

SETTING THE RECORD STRAIGHT — UAE authorities shot down rumors of restrictions on investors moving capital out of the UAE, including by freezing bank accounts and imposing restrictions on money transfers, calling the reports false and fake news.

Watch this space

TAX — UAE authorities could be offering greater leniency to expats who have left the country due to the ongoing regional war, the Financial Times reports, citing people with knowledge of the plan. The Federal Tax Authority (FTA) is now expected to review residency applications on a case-by-case basis for those whose travel or stay has been disrupted by the war, showing more leniency on the requirement for residents to spend 183 days in a year (or 90 days for those who are employed or own a home in the UAE)

Why it matters: Many high-net-worth individuals who fled when the conflict began on February 28 risk losing their tax-exempt status. If these residents are forced to pay taxes in their home jurisdictions (like the UK), the UAE risks a permanent exodus of capital and talent.

INVESTMENT — The UAE isn’t pulling back on its biggest global wager: Despite regional escalation, officials say the country’s USD 1.4 tn investment pipeline into the US remains on track, with plans to accelerate deployment, according to a letter by Ambassador Yousef Al Otaiba to the UAE-US Business Council.

Years of building sovereign buffers, hardening infrastructure, and strengthening supply chains are now being put to the test, keeping ports, airports, and trade flows running under pressure, Al Otaiba said. “This is not a war we wanted, and we worked intensely to avoid it,” Al Otaiba said. “But even as we held hope and pursued de-escalation, we also knew a war could someday come.”

In the pipeline so far: The initial pledge was made last year during a UAE delegation to Washington, and is set to come over 10 years. It saw Emirates Global Aluminium pledge to invest some USD 5-6 bn in the US’ first new smelter in more than four decades, and is also widely understood to be behind the US’ later greenlighting the export of Nvidia chips to the UAE.

INS — GCC ins. revenue growth is set for a sharp deceleration in 2026, with projections for Saudi Arabia and the UAE cooling to 5% — a significant drop from years of double-digit expansion, according to a recent S&P Global report. While the agency notes that direct exposure to war-related claims is limited and manageable, the conflict is reshaping the sector's risk profile and bottom lines.

Most regional insurers aren’t on the hook for direct war damage caused by the conflict. Standard policies “generally exclude war risks,” the report indicates, and specialized coverage is typically 100% offloaded to global reinsurers, insulating local balance sheets from catastrophic payouts.

The real pain is operational: A prolonged disruption in the Strait of Hormuz is expected to squeeze supply chains and spike the cost of spare car parts and other imported goods. Given that motor lines account for 20-30% of total sector revenue, reduced business activity and tourism could mean a decrease in motor claims, which would offset claims inflation and eat into the underwriting profitability insurers have fought to maintain.

The outlook: While consumer-driven lines (like new car policies) will stall alongside wavering sentiment, a new revenue stream is emerging, which is high-margin war-risk coverage, the report explains. Watch for the UAE to lead the way with a formalized war-risk ins. scheme, offering a lifeline to the handful of insurers equipped to write specialized policies in a high-rate environment.

The big story abroad

Most eyes are on the impact of the regional war on financial markets, from crypto to gold and equities.

Asian shares look set for a correction — a 10% decline from a recent peak — as markets fall during early trading on the back of high oil prices and the escalation of the war in the region. Meanwhile, gold slid for the ninth consecutive day, tumbling nearly 4%, and bonds across the world are seeing a selloff.

LNG export declines are also getting attention: Global LNG exports fell to a six-month low this month as Qatar, one of the world’s largest gas producers, had to halt exports due to the disruption to the Strait of Hormuz and repeated attacks on facilities, according to Kpler data picked up by Bloomberg.

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Oil watch

Oil pricing in the Middle East is being rewritten in real time, and it is happening inside one of the market’s most important benchmarks. The Dubai crude benchmark has been tweaked again as flows through the Strait of Hormuz stall, forcing pricing bodies to adapt to a market that’s no longer functioning normally, Bloomberg reports.

What changed this time: S&P Global (via Platts) has suspended a pricing offset that normally applies to Abu Dhabi’s flagship Murban crude, which will keep Murban from dropping below Dubai’s level during daily assessments. Crucially, this makes it more attractive to deliver into the benchmark at a time when supply options are shrinking.

Why this matters: The Dubai benchmark underpins pricing for a huge share of Middle East crude exports. But right now, the system is under stress — with only a limited pool of crude grades (mainly Murban and Oman) still able to participate due to shipping disruptions.

What’s driving all this: The closure of Hurmoz — one of the world’s most critical oil checkpoints — has choked off tanker traffic and forced producers to reroute or hold back supply. The UAE is still moving some barrels via Fujairah (outside the strait), while Oman is relying on Mina Al Fahal — but both routes are seeing disruptions.

The price distortion is already showing: Murban was trading around USD 125.9 / bbl, while Dubai set closer to USD 166.8 / bbl before the change — a wide and atypical gap for two benchmarks that typically move more in sync.

The bigger picture: This is the second methodology change in weeks. First, Gulf-loading crude was excluded altogether. Now, pricing rules are being loosened to keep the benchmark alive.

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