Good morning, friends, and happy hump day. It’s the slowest week we’ve had in a while, as everyone still seems to be taking shelter — whether from the war or from the apocalyptic weather — and staying home.

While things have been thankfully calm on the ground here in the UAE, with the (welcome) absence of public safety alerts and interception sounds, we’re still on edge as the rest of the region continues to face attacks. Another Amazon Web Services region in Bahrain was impacted by what the company said was drone activity in the area, leading to an outage that has impacted several websites that we’ve tried to visit. That’s the second AWS outage caused by the war this month.

We’re also waiting for updates on whether or not there might actually be talks between the US and Iran, as US President Donald Trump has claimed.

The validity of his claims is unclear, and Iran has denied that any talks have taken place, but countries are already lining up to offer mediation, with Pakistan saying it would like to host peace talks between the countries to end the war. But we’ll just have to wait and see…

While we wait, sovereign wealth funds in our neck of the woods are keeping busy. Mubadala is reportedly involved in a fund linked to the US-led Pax Silica initiative, focused on critical minerals supply chains, at a time when disruptions threaten supply chains that are vital to a slew of sectors, including semiconductor manufacturing. Meanwhile, the Abu Dhabi Investment Authority is making yet another commitment to private credit, this time through a private credit manager that offers significant risk transfers to European banks.

From the Dept. of Ongoing Disruptions

EVENTS — Another one bites the dust: Abu Dhabi’s highly anticipated Offlimits Music ‌Festival, headlined by Shakira and the Jonas Brothers and initially set to happen on 4 April, has been postponed to November, Reuters reports, citing UAE ⁠ticketing platform Platinumlist.

The festival pushback adds to a growing list of events that have been delayed due to the ongoing war. The International Association of Amusement Parks and Attractions pushed back its Expo Middle East, and London-based Informa has delayed events for over 10 brands.

AVIATION — Global airlines are continuing to avoid our area as regional escalation shows no signs of letting up. European carriers have extended flight suspensions well into the summer and in some cases even later than that. Lufthansa Group airlines — including Lufthansa, Swiss, and Austrian — are suspending flights to Dubai through 31 May and to Abu Dhabi through 24 October, Bloomberg reports. Plus:

• KLM canceled flights to Dubai through 17 May;
• Cathay Pacific suspended passenger flights to Dubai through 31 May,
• Singapore Airlines paused its Singapore-Dubai route through 30 April;
• British Airways suspended flights to Dubai through 31 May.

🌪️ WEATHER- No relief from the storm just yet: Thunderstorms, heavy rain, winds, and even a tornado are in the cards this morning. Expect a high of 26°C in Dubai and a low of 21°C, while Abu Dhabi will see a high of 30°C and a low of 22°C.

And from the Dept. of the Resumption of Operations?

Schools back early? Dubai’s school operator Knowledge and Human Development Authority confirmed online learning across all private educational institutions in the emirate until Friday, 3 April, but that schools can request to return earlier, with requests reviewed on a case-by-case basis, according to a post on X. Schools and universities were said to remain online for another week, but it seems from the statement that an earlier return for some schools is possible.

Two of the UAE’s biggest private school operators, Taaleem and GEMS Education, already sent a formal request to resume on-campus learning as early as 30 March, Gulf News reports.

Watch this space

WAR WATCH — The UAE is tightening scrutiny on Iran-linked institutions at home: Dubai authorities have shut down Iranian state-linked institutions — including the long-standing Iranian Hospital, a social club, and Iranian schools — as it enters a third week of missiles and drone attacks from Iran, the Financial Times reports. The closures are not aimed at the wider Iranian community in the UAE but are linked to their “misuse” to “advance agendas that do not serve the Iranian people and in violation of UAE laws,” a UAE official told the salmon-colored paper.

This comes amid a broader shift in messaging from the UAE of stronger cooperation with the US and a need for more long-term security commitments even after the war ends. Diplomatic Advisor Anwar Gargash said the UAE is not only seeking a ceasefire but is interested in securing long-term regional stability — including addressing missile and drone threats and safeguarding critical waterways, according to an X post. “It is unreasonable for aggression to turn into a permanent state of threat,” Gargash said. This follows signals from last week that the UAE could be involved in a US-led effort to secure the Strait of Hormuz.

Security ties are also extending beyond Washington: The UAE is also stepping up defense coordination with European partners. President Mohamed bin Zayed Al Nahyan has recently met France’s Armed Forces Minister, with both sides reaffirming their commitment to deeper defense cooperation under their strategic partnership, state news agency Wam reports.

ECONOMY — The Central Bank of the UAE (CBUAE) says it expects real GDP growth to come in at 5.6% for 2025 and 2026 in its latest Quarterly Economic Review (pdf), up from the December forecast of 5% growth in 2025 and 5.2% for this year.

Yes, but…: While this projection is said to be driven by a 6.1% growth in the non-hydrocarbon sector, the report does not directly mention the current US-Iran war, which will potentially dampen the projected growth trajectory.

International agencies have already slashed the GDP growth forecast for the country in light of the war. Oxford Economics slashed their GDP growth projection by 3.2 percentage points, S&P downgraded their GDP forecast to 2.2% (down from an initial 4.7%), and BMI has also lowered its growth projection by 0.6 percentage points to 5%. Meanwhile, Goldman Sachs sees the economy potentially flipping over to contraction (by 5%) if the war persists until the end of April.

FINANCIAL SERVICES — Millennium Management eyes relocating staff: Global hedge fund giant Millennium Management is weighing options to offer relocation options to its Dubai-based workforce as the war continues to disrupt business operations across the Emirates, a source familiar with the matter told Bloomberg.

So, where (possibly) to? The firm — founded by b’naire Izzy Englander — is reportedly considering similarly tax-friendly jurisdictions like Jersey for over 100 employees who are seeking to relocate, following weeks of remote work and heightened threats of missile and drone attacks.

Not the first, and perhaps not the last: A growing list of global financial institutions, including Goldman Sachs and Citigroup, have evacuated staff from their Dubai offices and shifted to remote or flexible work arrangements.

TRADING — India extends UAE gold imports quota amid trade disruptions: India has extended the validity of tariff rate quota authorizations for gold imports from the UAE until 30 June from its original 31 March deadline, Reuters reports, citing India’s Foreign Trade Directorate General.

What this means: The measure falls under the UAE-India CEPA and will be automatically applied to all authorizations issued in FY 2025-26. Importers won’t have to submit new applications or pay additional fees.

IN CONTEXT- Gold supply chains are among the many that have been disrupted by the war. Earlier in the conflict, there were reports of rerouting gold flows to other refinery destinations further out of the direct line of fire. However, rerouting is likely to come with a heftier price tag, which could help Dubai remain a top pick for refining.

INVESTMENT WATCH — MGX backs OpenAI’s next round: Abu Dhabi state AI investor MGX is reportedly joining OpenAI’s USD 10 bn funding round, expected to close by the end of March, unnamed sources told Bloomberg. The round will also see participation from firms like Coatue Management, Thrive Capital, and Altimeter Capital, and could raise the company’s total valuation to roughly USD 850 bn. Negotiations are still ongoing, and final investment pledges may change.

MGX is a notable backer of AI firms, having invested in three major AI rivals — OpenAI, xAI, and Anthropic.

DEBT — Real estate bonds in distress: Six USD-denominated property bonds by Binghatti Holding and Omniyat Holdings are now trading at distressed levels, according to Bloomberg. The instruments have yield spreads exceeding 1k bps beyond riskfree rates.

It does not look good, says Fitch Ratings: Binghatti was placed on watch for possible downgrades earlier this month by the credit rating agency, which cited heightened geopolitical risk among other factors. Omniyat received the same treatment last week for similar reasons.

Data point

16% — that was the occupancy level at Dubai hotels as of 17 March, plummeting from peak-season averages of 90%, as the effects of the regional war continue to hit the UAE, the Financial Times reports, citing Lighthouse Intelligence data. High-end restaurants and clubs are seeing similar drops in demand, with some sending staff to sister outlets abroad.

How hotels are responding: Some luxury hotels are slashing prices, cutting staff hours, and offering some incentives for guests to spend. The One&Only Royal Mirage has even completely closed one building, as industry insiders say the city is bracing for an early “summer lull,” the FT added. We might be seeing a pivot in target clients toward “aspirational elites,” one consultant said, to fill the gap left by the usual customers.

Operators are taking lessons from past crises. Kerzner, which runs the Royal Mirage, said temporary closures allow time to handle maintenance work, while Sunset Hospitality is scaling back operations and adopting flexible staffing arrangements. Many staff have been placed on unpaid leave or early holidays. Hope that business will return, and the reluctance to restart visa processes for workers, is keeping layoffs at bay for now.

The big story abroad

In what would be a major escalation, the Pentagon is reportedly expected to dispatch thousands of soldiers to the region and potentially inside Iranian territory. The number of troops reportedly ranges from 2k to 3k soldiers from the US Army’s Airborne Division.

Meanwhile, Iran says Strait of Hormuz is open: Tehran said that “non-hostile vessels” may transit the Strait of Hormuz “in coordination with Iranian authorities,” in a letter to International Maritime Organization members. That said, some 3.2k vessels remain stuck in the Arabian Gulf, seemingly unwilling to brave the waterway yet.

Mediators from Egypt, Turkey, and Pakistan want to set up talks between the US and Iran by Thursday, though a diplomatic divide remains between Washington and Tehran, the Wall Street Journal reports.

And in the world of AI: ChatGPT maker OpenAI is shuttering its video generation offering Sora just six months after its debut in a bid to streamline its products. The company positioned the program as a means to create lifelike AI-generated videos within a community-focused environment. Available on the Apple App Store without charge, Sora has seen its popularity decline since its debut.

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