Fears of a direct conflict between the US and Iran have eased over the past day or so, but the risk has not disappeared and the rest of the MENA region is vulnerable to any retaliation by Tehran. Attacks on oil facilities or an attempt to close the Strait of Hormuz pose the greatest threat to the Gulf economies. And Iranian attempts to sow discord could make Lebanon’s bad economic situation even worse. Even if all of this is avoided, heightened tensions will continue to act as a headwind to local financial markets.
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