At first glance, the Gulf’s lack of trade links with Iran means that international sanctions will have little impact on most of the oil-rich region’s economies. Indeed, Iran’s threat to block the Strait of Hormuz seems to be the only risk to the Gulf’s trade and output. However, even if Iran is very unlikely to act on its threats, continued tensions will add to the high levels of regional political risk. Coupled with poor global conditions, foreign investors are likely to steer clear of the region in 2012.
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