Gulf Funds Are Recalibrating American Investments, Including Backing for Paramount Merger, as Iran War Rages On
As the conflict in Iran intensifies, Gulf sovereign wealth funds are reassessing their investments in the United States. This reevaluation is driven by both commercial necessities and political considerations, particularly regarding the high-profile merger between Paramount Skydance and Warner Brothers Discovery.
Investment Review Amid Conflict
Sources familiar with the situation indicate that the Qatar Investment Authority (QIA) is set to reconvene its board to discuss its investment strategy in light of the ongoing war. A source, who requested anonymity, stated, “Even from a purely numbers perspective, you have to look at this again.” The source emphasized the importance of a collective decision, highlighting that Qatar is unlikely to withdraw from the merger without similar action from Saudi Arabia.
The Paramount-Warner Brothers Merger
The merger between Paramount Skydance and Warner Brothers Discovery was initially announced on February 27, 2026. The following day, the U.S. and Israel launched a surprise attack on Iran, which retaliated by targeting Gulf nations hosting U.S. military bases. These Gulf countries are crucial financial backers of the merger, having pledged $24 billion to support a deal valued at nearly $111 billion.
Potential Impacts of the War
While the merger is likely to proceed, the ongoing conflict raises concerns about the stability of Gulf investments. If the war continues for an extended period, the risks to Gulf oil and gas assets may prompt a reevaluation of financial commitments. The geopolitical landscape is further complicated by former President Trump’s focus on Iran’s oil infrastructure and Iran’s threats to retaliate against Gulf assets.
AI Investments Under Scrutiny
The Gulf funds’ reassessment extends beyond the Paramount merger. The financial backing for the burgeoning artificial intelligence (AI) sector is also under scrutiny. Harvard economist Jason Furman noted that over 90% of GDP growth in the first half of 2025 was driven by AI and related investments, much of which is financed by Gulf capital.
Concerns for Future Growth
Furman expressed concerns about the potential knock-on effects if Gulf investors cannot maintain their financial commitments. “Hyperscalers,” or major companies like OpenAI, may weather the storm, but smaller firms could face dire consequences without Gulf support. The ongoing conflict raises questions about the sustainability of these investments and the future of AI development in the U.S.
Internal Reviews and Potential Divestments
In early March, reports emerged that Gulf nations, including Saudi Arabia, Qatar, the UAE, and Kuwait, were collectively reviewing their investments. A Gulf official indicated that some countries were considering invoking force majeure clauses in current contracts and reassessing future commitments to mitigate economic strain from the war.
Quiet Divestment Likely
According to industry sources, divestment may occur quietly as Gulf investors adapt to new financial realities. “Just mathematically, it will have to happen,” stated one source, suggesting that the impacts of the conflict would lead to a reevaluation of commitments without overt announcements.
Key Players in the Merger
Paramount is led by David Ellison, son of Oracle founder Larry Ellison. The Ellisons have invested heavily in the merger with Warner Brothers, which also involves significant political connections. David Ellison’s admiration for media figures like Bari Weiss, who has publicly supported Israel, adds another layer to the merger’s complexities.
Saudi Influence on Decisions
The decision-making process surrounding the merger is heavily influenced by Saudi Arabia. An industry source noted, “It’s not a Qatar decision. It’s not a Saudi-UAE decision. It’s a Saudi decision.” This underscores the interconnectedness of Gulf countries regarding investment strategies and the potential consequences of the ongoing conflict.
Future Outlook
The upcoming meetings of Gulf investment boards are expected to adopt a wait-and-see approach as the political and economic landscapes continue to evolve. The consensus appears to be that if Saudi Arabia remains committed, Qatar will likely follow suit. However, if Saudi Arabia withdraws, Qatar may delay its involvement further.
Potential for Force Majeure Clauses
As the situation unfolds, the possibility of invoking force majeure clauses in existing contracts could provide a means for Gulf investors to navigate the challenges posed by the ongoing conflict. The financial implications of the war are significant, and Gulf nations are poised to act strategically in response to changing circumstances.
Conclusion
The recalibration of Gulf investments in the U.S. reflects a broader trend influenced by geopolitical tensions and economic realities. As the Iran war rages on, the financial commitments of Gulf sovereign wealth funds are under scrutiny, with potential implications for major deals like the Paramount-Warner Brothers merger and the future of AI investments. The evolving landscape necessitates careful consideration by all parties involved.
Note: This article is based on information available as of October 2023 and aims to provide an overview of the current investment climate influenced by geopolitical events.
