When the Gulf Gulps: Macro Outlook and Credit Risk — India, ASEAN, GCC

The US–Iran conflict escalation heightened uncertainty around Gulf energy infrastructure, key maritime corridors, and broader global financing conditions. The spillover effect manifests for many countries through higher energy costs, shipping and insurance frictions, and tighter external funding conditions. Using S&P Global Market Intelligence’s RiskGauge™ Model and Macro Scenario Model (MSM), risk teams can translate the macro-economic implications of this shock into sector-level movements of the median probability of default (PD) of publicly listed firms operating in those countries, helping procurement, supply chain, and lending functions anticipate where counterparty and supplier risk could worsen under stress.

RiskGauge™ estimates a firm’s PD by combining financial fundamentals with market signals and broader socio-economic factors across a global company universe. MSM complements RiskGauge by projecting how credit risk could evolve under baseline and stressed macroeconomic pathways produced by S&P Global Market Intelligence economists via their Global Link Model (GLM). Together, these tools provide a forward-looking framework for risk managers to identify where risk vulnerabilities may concentrate as geopolitical risks feed through input costs, demand conditions, and financing availability.

In the scenario narrative developed by S&P Global Market Intelligence economists, Iran retaliates against critical infrastructure in Gulf countries that supported the Israeli and US military campaign, hostilities expand into the Arabian Sea, Indian Ocean, and the Mediterranean Sea in ways that materially raise the risk of disruption to commercial shipping, and heavy interruptions across key trade routes and ports alter trade patterns by affecting the cost and availability of oil and gas for both Asia and Europe.

Figure 1 compares the relative change in RiskGauge™ probability of default (PD) of publicly listed companies in India, ASEAN, and the GCC, across sectors. We compare the current probability of default (PD), as of February 2026, with the scenario PD. This gives us the expected deterioration or improvement in companies’ credit risk in the following one-year period.

The escalation of geopolitical tensions described in our chosen scenario may lead to distinctive impacts across companies operating in different sectors in India, with important differences versus peer markets in ASEAN and the GCC over the coming year. 

^{Figure 1: Relative change in RiskGauge™ median PD for publicly listed companies in India, ASEAN and GCC, under the US-Iran Conflict Escalation Scenario.}