Iran war could pull Gulf capital out of global markets

Vijay Valecha, Mon, Sept 28, 2026 AGBI

Uncertainty caused by the Iran war could keep tens of billions of dollars of Gulf capital at home that might otherwise have been invested overseas, according to asset manager BlackRock.

The reallocation could be directed towards Gulf private markets, according to Ben Powell, chief investment strategist for the Middle East and Asia-Pacific at the BlackRock Investment Institute. He adds that between $50-$100 billion of regional capital could be redirected domestically.

Gulf sovereign wealth funds (SWFs) have become some of the world’s most important sources of institutional capital, backing private equity, infrastructure, property and technology investments across the US, Europe and Asia.

But analysts say the conflict is strengthening an existing push towards domestic investment, potentially reducing overseas allocations at the margin and concentrating outbound capital into fewer, safer bets.

Global private equity, infrastructure and real estate managers have spent the past decade courting Gulf sovereign and family capital, according to Vijay Valecha, chief investment officer at brokerage Century Financial, as a source of large-ticket commitments, particularly as some Western institutional investors have faced liquidity constraints.

That makes even a relatively small shift in Gulf allocations significant for international fund managers.

“If even a portion of that $50 to $100 billion stays home, fundraising cycles for global managers could lengthen, and competition for the remaining pool of Gulf capital will intensify among fund managers in the US, Europe and Asia,” said Vijay Valecha.

“The conflict has accelerated a domestic pivot that was already under way,” he said.

The US would be particularly exposed to any rebalancing.

GCC sovereign wealth funds invested a record $54 billion across 108 transactions in the first half of 2026, according to Global SWF, as reported in The National, with almost half of the capital going to the US. Gulf funds were also involved in 21 of the 42 global transactions worth more than $1 billion during the period.

AGBI