From Shakira to F1: How Iran war is disrupting Gulf’s entertainment and sports economy

The economic fallout from the Iran war is increasingly spreading beyond oil markets and shipping lanes, with the Gulf’s fast-growing entertainment, sports and tourism industries also facing disruption.

The latest sign came from Abu Dhabi, where organisers cancelled the 2026 edition of the Offlimits music festival, which was due to be headlined by Colombian singer Shakira, according to media reports. The festival had already been postponed from April to November because of regional tensions. Organisers said the event would return in 2027 and that ticket holders would receive refunds.

The cancellation comes as the United Arab Emirates has suspended economic and financial dealings with Iran following what its defence ministry said were two ballistic missiles launched from Iran and assessed as targeting maritime traffic. Iran has rejected the allegation as baseless.

The latest disruption highlights a broader challenge for Gulf economies. Countries including the UAE, Saudi Arabia and Qatar have spent years investing in tourism, aviation, entertainment and international sport as part of efforts to diversify their economies away from hydrocarbons.

The conflict is now testing that strategy.

Shakira festival cancelled in Abu Dhabi

The Offlimits music festival was scheduled to take place at Etihad Park on Abu Dhabi’s Yas Island on November 21. Shakira was to headline a line-up that also included the Jonas Brothers, Ne-Yo, Biffy Clyro and other international and regional acts.

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The festival was originally scheduled for April 4 but was moved to November amid regional tensions. On August 18, organisers announced that the 2026 edition had been cancelled and said tickets would be automatically refunded. They said the festival would return to Abu Dhabi in 2027.

The cancellation is significant because the Gulf’s entertainment industry is no longer built around isolated concerts. Large music festivals and sporting events are increasingly part of a wider tourism strategy designed to attract international visitors and encourage spending on hotels, restaurants, transport, retail and other services.

Shakira’s Doha concert, meanwhile, has been postponed rather than cancelled. The show, originally scheduled for April 1, has been rescheduled for November 18, according to Qatar Tourism.

A separate Abu Dhabi concert by Christina Aguilera, originally scheduled for April and moved to September 25, remains listed for September 25 by Ticketmaster UAE and Etihad Arena as of August 21. It should therefore not be described as cancelled.

Gulf tourism faces a sharp 2026 setback

Fresh data from the World Travel & Tourism Council shows the scale of the challenge.

In a report published on August 6, WTTC forecast that the Middle East would be the only region in the world to record a decline in Travel & Tourism GDP in 2026.

The council expects the sector to contract by 14.5 per cent, from $386 billion in 2025 to $330 billion this year. WTTC attributed the downturn to the conflict’s impact on airspace and travel flows through a region that is a major global aviation hub.

The region handles around 14 per cent of international passengers globally, or about one in every seven international travellers, according to WTTC.

The UAE is particularly exposed because of its position as a major aviation and tourism hub.

WTTC estimates that Travel & Tourism contributes 11.9 per cent of UAE GDP and supports 13.6 per cent of total employment. International visitor spending in the UAE is forecast at nearly $57 billion.

Qatar is also highly exposed to international travel. WTTC estimates that visitor spending accounts for 94.1 per cent of the country’s services exports, one of the highest concentrations in the region.

That makes prolonged disruption to aviation and international events particularly important for Gulf economies.

Aviation disruption compounds the problem

The impact of the conflict is already visible in aviation data.

The International Air Transport Association said that during the first seven days of March, roughly 85 per cent of flights departing from or arriving at Gulf airports were cancelled. By the end of March, fewer than half of the flights originally scheduled from those airports were operating.

The disruption continued to affect forward airline schedules. IATA said close to one-quarter of flights to and from the region scheduled for May had been cancelled compared with plans made in February. Around 3 per cent of planned capacity for June-August was also removed from airline schedules.

The importance of Gulf aviation extends beyond the region itself.

Disruption at major Gulf hubs can affect passenger flows between Asia, Europe and other parts of the world. For the events industry, that creates a direct problem: international artists, athletes, teams, support staff and spectators all depend on reliable air connectivity.

F1 illustrates the cost of disruption

Formula 1 provides one of the clearest examples of how the conflict has affected international sport.

In March, Formula 1 and the FIA confirmed that the Bahrain and Saudi Arabian Grands Prix would not take place in April because of the regional security situation. No replacement races were scheduled for April.

Formula 1 later found a way to preserve the Bahrain round.

In July, F1 and the FIA announced that Malaysia’s Sepang International Circuit would host the Bahrain Grand Prix from October 2 to 4, effectively relocating the event while retaining Bahrain’s place in the championship.

The move means the Bahrain race has not disappeared from the 2026 championship. But it illustrates the logistical and economic disruption created when a major international sporting event can no longer be held at its planned venue.

Estimates cited by Forbes have put the potential revenue impact of the Bahrain and Saudi race cancellations at around 190million-200 million, based on analysis by Guggenheim Partners.

Hormuz adds another layer of risk

The disruption is not limited to aviation. The Strait of Hormuz, one of the world’s most important energy and shipping routes, continues to operate at sharply reduced traffic levels.

Reuters reported on August 21 that only seven commodity ships passed through the Strait on Thursday, down from 14 the previous day, according to ship-tracking data from Kpler. Four ships entered the waterway and three exited. No very large crude carriers or LNG tankers were among them.

Before the war, the waterway carried nearly one-fifth of global crude oil and liquefied natural gas shipments.

The decline in shipping matters for Gulf economies because the region depends heavily on maritime trade and energy exports. It also increases logistical uncertainty for businesses and raises the cost and complexity of moving goods.

Oil prices have provided some offset for energy producers.

On August 20, Brent crude settled at around $94.60 a barrel, up 3.1 per cent, according to Reuters. The rise provided some support to Gulf stock markets, although investor caution remained high. Qatar’s benchmark index fell 0.9 per cent that day, extending a four-session losing streak and closing at its lowest level in more than two years.

UAE-Iran trade ties now suspended

The latest escalation is also affecting commercial relations directly.

The UAE announced on August 18 that it would suspend economic and financial dealings with Iran until further notice, following the missile incident. Reuters reported that the UAE defence ministry said it had detected two ballistic missiles launched from Iran and assessed that they were targeting maritime traffic. The UAE said the missiles fell into the sea. Iran rejected the allegation.

The move matters because Dubai has historically been an important commercial and re-export hub for trade involving Iran.

A prolonged suspension of economic and financial transactions could therefore affect businesses beyond the immediate bilateral relationship and add another layer of pressure to regional commerce.

Gulf’s diversification strategy faces a test

The latest disruption comes at a sensitive time for the Gulf.

Saudi Arabia, the UAE, Qatar and other regional economies have invested heavily in tourism, entertainment, infrastructure and sport as part of efforts to reduce their dependence on oil.

WTTC’s latest figures show the scale of that investment.

Saudi Arabia’s Travel & Tourism investment grew 19.4 per cent in 2025, supported by Vision 2030, investor-friendly reforms and a pipeline of large tourism projects, according to WTTC.

The long-term outlook remains much more positive.

WTTC expects the Middle East’s Travel & Tourism economy to grow at an annual rate of 6.3 per cent between 2026 and 2036, reaching $605 billion by 2036. Saudi Arabia, the UAE, Oman and Qatar are expected to be among the main drivers of that expansion. Together, their Travel & Tourism economies generated $272 billion in 2025 and are projected to reach $435 billion by 2036.

That suggests the current disruption is not necessarily a reversal of the Gulf’s diversification story.

It is, however, a major test of how resilient that strategy is to geopolitical shocks.

The cost goes beyond cancelled concerts

The cancellation of a Shakira-led festival or the relocation of an F1 race is highly visible. But these events represent only one part of the economic impact.

A major international event creates a chain of spending across airlines, hotels, restaurants, taxis, retailers, event companies and temporary workers.

When an event is cancelled or moved, some of that spending can disappear or shift to another destination.

The same applies to aviation and shipping disruption. Longer flight routes can increase airline costs. Reduced shipping through Hormuz raises logistical risks. Higher oil prices can provide a revenue cushion for energy exporters but can also increase fuel and transportation costs across the wider economy.

The Gulf therefore faces a difficult balancing act.

Its oil wealth provides a substantial financial buffer. But the conflict is simultaneously disrupting some of the sectors that governments have identified as engines of their post-oil economies.

(With inputs from agencies.)