The ongoing war in the Persian Gulf has unsettled the overall security situation in the region. Its repercussions are expected to hit Nepal as well.

Following attacks on Iran by the United States and Israel, Tehran has retaliated by targeting American military camps stationed in Qatar, Saudi Arabia, Bahrain, Kuwait, the United Arab Emirates and Oman.

With the escalation of conflict and hostilities, air services operating through Gulf countries have been disrupted and employment prospects in the region are expected to suffer hugely.

Data suggests that the direct impact of conflict will be felt in Nepal’s tourism, remittance inflows, foreign trade and labour migration. At present, around 1.9 million Nepali workers are employed across the Gulf region. Of the approximately 700,000 Nepalis who leave each year for foreign employment, nearly 65 percent—about 450,000—head to the Gulf.

These migrant workers contribute approximately 41 percent of Nepal’s total remittance inflows. In the fiscal year 2024-25, Nepal received Rs1.702 trillion in remittances, of which Rs673 billion came from Gulf countries. In the first six months of the current fiscal year 2025-26 alone, Rs1.03 trillion was remitted to Nepal, with Rs422 billion—about 41 percent of the total during that period—originating from the Gulf.

Although modest in comparison to other regions, Gulf countries also send tourists to Nepal. According to the Nepal Tourism Board, 20,504 visitors from Gulf nations arrived in the last fiscal year, an increase compared to the previous year. These arrivals accounted for 1.8 percent of Nepal’s total tourist inflow of 1,158,459 during the same period.

If tensions in West Asia persist, Nepal’s foreign currency earnings from remittances, tourism and exports are likely to be affected. Imports of essential goods from Gulf countries could also face disruption. These include gold, silver and jewellery, copper wire, plastics, packaging materials and raw materials vital for the pipe industry. Experts warn that fuel imports could decline and prices rise, with broader consequences for the national economy.

Following attacks on major petroleum facilities in the Gulf, global crude oil prices began surging from Sunday, while employment opportunities in the region have also been strained. Analysts caution that prolonged instability could intensify inflationary pressures in Nepal, given the country’s heavy reliance on imported fuel and goods.

In recent years, Nepal has recorded only modest economic growth while becoming increasingly dependent on imports. Economists warn that any disruption to imports or a rise in import costs could drive inflation and create shortages of essential goods, including petroleum products.

“When imports become expensive, transportation and insurance costs also rise, putting pressure on the country’s foreign exchange reserves,” said trade expert Rabi Shankar Saiju. “Given the likelihood that Nepal’s foreign employment sector could be affected, the government must prepare security and evacuation plans for labour destinations. Embassies in Gulf countries should be placed on high alert and if necessary, workers must be repatriated immediately through chartered flights.”

He cautioned that alongside the rescue of workers, outbound labour migration could also slow down. “That would directly affect employment opportunities and remittance inflows,” he added.

Ram Sharan Kharel, head of the Economic Research Department at the Nepal Rastra Bank, said that trade activities across many West and Central Asian countries had been disrupted due to the conflict involving Iran.

“Nepal receives remittances from around 15 countries in the broader region, and their share exceeds 40 percent of total remittance inflows. There is a strong possibility that remittances will be directly affected by the war,” he said.

Kharel noted that Gulf nations remain the primary destinations for Nepali migrant workers. “If their economies are shaken, the environment for sending additional workers abroad will weaken. Moreover, as the government has already imposed restrictions on travel to certain destinations, domestic employment will also feel the strain,” he said.

“In terms of foreign trade, the risk of disruption to commerce routed through Gulf countries is high.”

Former president of the Nepal Remitters Association Chandra Tandon said unrest in the Gulf had already affected Nepali workers there, with inevitable consequences for remittance flows.

“On Monday alone, I spoke with our staff in Dubai, Doha, Riyadh and Kuwait about the situation. They described difficult circumstances,” Tandon said. “On Sunday and Monday, many money exchange companies in Qatar were closed. Even those that opened reported minimal transactions. As the attacks continue, the economies of those countries will be affected, and the impact will ripple out to Nepal.”

Government data show that the countries being affected by the conflict are among Nepal’s principal labour destinations. Approximately 700,000 Nepalis are employed in the United Arab Emirates, 384,000 in Saudi Arabia, 360,000 in Qatar, 175,000 in Kuwait, 30,000 in Bahrain and 25,000 in Oman. Beyond the Gulf, around 60,000 Nepalis work in Romania, 50,000 in South Korea, 50,000 in Portugal and 40,000 in Croatia.

Qatar, which hosted the 2022 FIFA World Cup and is preparing major infrastructure projects ahead of the 2030 Asian Games, remains a key employer. Government data show 140,000 Nepalis left for Qatar in the fiscal year 2024-25, up from 134,000 the previous year. Around 357,000 Nepalis are currently working there.

Labour expert Yubaraj Basnet cautioned against premature conclusions but acknowledged risks. “So far, attacks appear focused on American military facilities rather than civilian infrastructure,” he said. “But the duration of the conflict will determine the future of our principal labour destinations.”

Beyond labour and remittance, trade exposure is substantial. According to the Department of Customs, Nepal imported goods worth Rs50.31 billion from Gulf countries last fiscal year and exported Rs3.45 billion. In the first seven months of the current fiscal year, imports from the region stood at Rs48.76 billion, while exports totalled Rs1.64 billion.

The United Arab Emirates is Nepal’s largest trading partner in the Gulf, primarily supplying gold, silver and copper wire. In seven months, Nepal imported precious metals and copper products worth over Rs37 billion from the UAE. Saudi Arabia supplies essential polymers for plastic, packaging and pipe industries, while Qatar is a major source of chemical fertiliser, with imports exceeding Rs2.5 billion in seven months. Oman provides gypsum vital for cement production.

“Disruption in polymer or copper supplies would immediately hit domestic manufacturing,” warned trade expert Saiju. “If fertiliser shipments from Qatar are obstructed during the planting season, food security could be at risk,” he said.

Oil markets have already reacted. International media reported crude prices climbing to around $82 per barrel on Monday, with projections that they could approach $100 if instability continues. As Nepal imports all petroleum products from Indian Oil Corporation—which sources much of its crude from the Gulf—any sustained spike would inflate transport and production costs domestically.

“The Strait of Hormuz is critical. A significant share of global oil shipments passes through that route. Any prolonged disruption will transmit price shocks to Nepal,” said Kharel.

Amid reports of long queues at petrol pumps, the Nepal Oil Corporation sought to reassure the public. Managing Director Chandika Bhatta said supplies via pipeline from India remained regular and sufficient, urging consumers not to hoard fuel in jerrycans due to fire risks.

Kamlesh Kumar Agrawal, president of the Nepal Chamber of Commerce, said Nepal could not insulate itself from global turbulence. “We are integrated into the world economy. Short-term remittance decline is possible, and supply chains will face stress. The scale of impact depends on how long the conflict lasts and how severely Gulf economies are shaken,” he said.