IMF cuts Middle East growth forecast amid war and Strait of Hormuz closure

Highlights
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Saudi Arabia's civil defence agency said on Wednesday that four people — two women, a man and a child — were wounded by debris from two intercepted Houthi cruise missiles in the capital and that 15 homes were damaged. A powerful explosion then rang out in the Saudi capital, with a phone alert sent to residents saying "the city of Riyadh is facing a hostile aerial threat".
US President Donald Trump has told US media that a decision will be made on Iran "very soon". However, the Pentagon, on orders from the White House, has also drafted plans for a multi-day air campaign targeting Iranian missile, drone and energy facilities, The New York Times reported.
Senior national security officials, led by Vice President JD Vance, reviewed the options on Oct. 9 at Camp David, the paper reported. Trump has earlier ruled out launching strikes before the Nov. 3 midterm elections.
The Trump administration invoked the Defence Production Act to partner with Delek US Holdings on expanding their Tyler, Texas refinery, to produce "millions" more gallons of commercial and military-grade fuel, according to US Vice President JD Vance, who made the announcement. The project is significant: no new US refinery has been built since the 1970s. The project is expected to create hundreds of jobs in Smith County, lower transportation costs, and strengthen national defence by boosting domestic refining capacity. Texas Railroad Commissioner Wayne Christian said the move will enhance energy security, local economy, and fuel affordability amid national gas prices around $4.34 per gallon.
The Houthis warned the United States against intervention, with political bureau member Mohammed Al Bukhaiti telling AFP they would target American interests in the region.
Bukhaiti said the purpose of the campaign against Saudi targets was to send a message to the crown prince "that he can no longer wage aggression against Yemen from a safe position".
The Riyadh airport attack had prompted US President Donald Trump to say he was considering joining Saudi strikes against the Houthis.
He wrote on his Truth Social platform on Tuesday that "the Houthis are behaving very badly", accusing them of acting "probably at the behest of Iran". The White House's @RapidResponse47 account reposted it on X early on Wednesday.
"I'll be there after the elections, and I will never forget!" he wrote, referring to next month's midterms.
The US military has rejected an Iranian Revolutionary Guard naval commander’s claim that Tehran controls the Strait of Hormuz, escalating the war of words over one of the world’s most important routes for oil shipments.
In a post on X on Tuesday, US Central Command (CentCom) disputed the claim that the Strait of Hormuz was under the control of Iran’s Islamic Revolutionary Guard Corps (IRGC) and that approaching US Navy warships would be sunk.
“American forces and regional partners clearly control the Strait of Hormuz,” CentCom said, adding that US forces had helped Gulf partners ship more than 19 million barrels of crude oil through the strait on Monday.
The post was a direct rebuttal to Iranian naval threats as Washington and Tehran continue to contest maritime security and military influence across the Gulf.
The Saudi-led coalition announced that its air defence systems had intercepted and destroyed a cruise missile in the Riyadh region following an attempt to target Saudi territory. The coalition reported no casualties or damage and reaffirmed its commitment to protecting Saudi airspace.
Iran’s seaborne crude exports remained at zero in October after collapsing in the second week of September, according to energy intelligence platform Vortexa.
Exports fell from a 14-day average of 230,000 barrels per day at the start of September to zero and remained there as of Oct. 5.
Vortexa said Iranian crude held in tankers on the water had fallen to 83 million barrels, including 43 million barrels trapped west of the Strait of Hormuz because of the US blockade.
Iran’s liquefied petroleum gas exports also fell 48% from the previous month to their lowest level since at least January 2023.
US Mission to Saudi Arabia issued a security alert for American government employees. It reads: "US government employees working in Saudi Arabia require special authorisation from Chief of Mission to use any airport in Saudi Arabia following recent aerial attacks on airports in the Kingdom.
"Saudia Arabia’s General Authority of Civil Aviation extended the suspension of operations at King Khalid International Airport in Riyadh through October 17. King Abdulaziz International Airport in Jeddah and King Fahd International Airport in Dammam are operational with some delays and cancellations.
"US citizens should be aware of potential attacks on airports, flight cancellations, airspace closures, and travel disruptions. Please take extreme caution if you choose to use airports in Saudi Arabia. We recommend checking your flight departure status directly with the airline and with the airport."
A powerful blast was heard in Riyadh on Tuesday, AFP journalists said, after authorities sent an alert warning of an aerial threat in the Saudi capital, which has been repeatedly targeted by Yemen's Houthis.
"The city of Riyadh is facing a hostile aerial threat," a phone alert sent to residents said, after the Houthis threatened to strike the kingdom.
UKMTO has received a report of an incident within the Strait of Hormuz. A verified source has reported that a tanker was struck by an unknown projectile.
Authorities are investigating.
Vessels are advised to transit with caution and report any suspicious activity to UKMTO.
Two ballistic missiles launched by the Houthi militia towards the city of Dhahran and the Haradh area have been intercepted and destroyed, said The Joint Forces Command of the Coalition.
Saudi Arabia’s Civil Defence has issued an early warning alert in Riyadh through the National Early Warning Platform for Emergencies, warning residents of a potential threat and urging them to follow official safety instructions.
Residents have been advised to remain calm, seek shelter inside buildings or rooms away from windows, avoid open areas, balconies and rooftops, and stay indoors until the danger has passed.
Motorists receiving the alert should pull over safely, away from bridges and high-rise buildings, while anyone noticing danger should contact emergency services on 911 and follow updates through official channels.
IRGC Navy commander Ali Azmaei said Tuesday Iran was waiting for US warships to approach the Strait of Hormuz so they could be sunk, warning that if Washington believed the waterway was open, its forces should “come closer and see who controls” it.
“The US military’s seven fleets have turned into fuel smugglers. They have moved away from the Strait of Hormuz because they are vulnerable,” he was quoted as saying by Tasnim News Agency.
“The Strait of Hormuz and the [Arabian] Gulf are under the control of the IRGC Navy, while the Sea of Oman is under the control of the regular navy. The blockade is outside the Sea of Oman.”
“The US military today has been reduced to misery and desperation,” he added. “We will deal firmly with any enemy that tries to bully us.”
Netanyahu is seriously considering resuming strikes on Iran before Israel’s October 27 elections after discussing a renewed war with Trump, with US officials believing the Israeli PM wants attacks to resume before the vote, per Israeli N12.
The discussions included a potential large-scale joint US-Israeli operation targeting Iran’s military and nuclear sites.
A senior US official said Trump told Netanyahu to “go ahead and prepare” but made no commitment on timing.
The Saudi-led coalition confirmed on Tuesday it had targeted a Yemeni oil company facility in Sanaa and two sites in other provinces, hours after urging civilians to evacuate the area of the strike in the Houthi-held capital.
Coalition spokesman Turki al-Maliki said on X that the facilities, including those in Saada and Dhamar provinces in western Yemen, were used to "supply the war effort" by the Houthis to "threaten the kingdom, Yemen, the southern Red Sea and waterways".
Saudi Arabia’s Civil Defence has issued an early warning alert in the Eastern Province through the National Early Warning Platform for Emergencies, warning residents of a potential threat and urging them to follow official safety instructions. The alert advises people to remain calm, seek shelter inside buildings or rooms away from windows, and stay indoors until the danger has passed.
The Joint Forces Command of the Coalition announced that it had carried out a targeted military operation to neutralise key sources supporting the Houthi militia’s war effort, reaffirming its strict commitment to international humanitarian law.
The coalition said it had taken all feasible precautions to avoid incidental civilian casualties and damage, and called on the Houthis to immediately halt what it described as terrorist attacks targeting civilians, civilian infrastructure, airports, ports and oil facilities.
Rashad Al Alimi, chairman of Yemen’s Presidential Leadership Council, said the “Dawn of Yemen” operation was “proceeding towards its goal of ending the Houthi militias’ coup”, adding that “there is no turning back, no matter the sacrifices”, in a live televised address on Tuesday evening.
President Donald Trump said on Tuesday he might ask Turkish President Recep Tayyip Erdogan to help Saudi Arabia deal with Yemen's Houthis, while leaving open the possibility of US military strikes against the group.
Speaking to reporters as he departed for Alaska, Trump criticized the Houthis over their recent attacks on Saudi Arabia, saying they were "behaving very badly."
Asked about involving Erdogan, Trump said he might do so. “President Erdogan, I think, would do as I ask,” he said.
The Saudi Cabinet has warned that the Houthi group will face the consequences of its crimes and repeated attacks on the Kingdom’s airports, the holy cities of Mecca and Medina, pilgrims and visitors to the Two Holy Mosques, as well as civilian and economic facilities.
The statement came during a Cabinet meeting chaired by Crown Prince and Prime Minister Mohammed bin Salman in Riyadh on Tuesday.
The Cabinet extended its deepest condolences and sympathy to the families of those killed in the attacks and wished the injured a speedy recovery.
It also praised the Saudi Armed Forces for their decisive role in defending the country, protecting its achievements and resources, and deterring any aggression or threat to its sovereignty and the safety of its citizens and residents.
The Cabinet reaffirmed the Kingdom’s determination to remain a place of security and stability while continuing its pursuit of progress and prosperity, alongside its efforts to promote peace and stability in the region and around the world.
US President Donald Trump made a series of remarks to reporters on major regional and international issues, revealing that he had held talks with Saudi Crown Prince Mohammed bin Salman about the situation in Yemen. Trump accused the Houthis of “behaving very badly” and suggested that he might seek Turkey’s involvement in the issue.
Turning to Iran, Trump called it a “failed state” that was unable to pay its soldiers, adding that a decision concerning the country would be made very soon.
On energy, Trump announced that diesel would be released for the benefit of the entire world, not just the United States.
Trump also confirmed that the United States was continuing to share intelligence with Ukraine.
“We are helping them, and we are sharing intelligence with them. We want the war to end, so we are working with them and with Russia to bring the war to an end,” he said.
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Air India Express on Tuesday suspended flights to and from Dammam, Jeddah and Riyadh until October 17, citing the evolving security situation in the region.
The airline said affected passengers are being offered complimentary rescheduling options or a full refund in case of cancellations.
The carrier added that it is closely monitoring developments before taking any further decisions on operations.
“In view of the evolving situation in the region, we have cancelled flights to and from Dammam, Jeddah and Riyadh until 17 October. Affected guests are being offered complimentary rescheduling or a full refund on cancellation. We continue to monitor the situation closely,” an Air India Express spokesperson said.
Saudi Arabia vows Houthis will face 'consequences for crimes'.
Saudi Arabia’s Cabinet has commended the Armed Forces for defending the kingdom, protecting its resources and deterring threats to its sovereignty and the safety of citizens and residents.
The Cabinet said these efforts help maintain Saudi Arabia’s security and stability while supporting its continued progress and prosperity.
It also reaffirmed the kingdom’s commitment to promoting peace at both regional and international levels.
EU backs UK over suspected Iran link to Fairford airbase threat
European Union foreign policy chief Kaja Kallas has backed the UK after British authorities concluded that Iran’s Islamic Revolutionary Guard Corps (IRGC) was almost certainly behind a threat to Fairford airbase.
In a post on X, Kallas condemned what she described as Iran’s campaign of intimidation, saying its activities extended beyond the Middle East.
Kallas said the EU had already designated the IRGC as a terrorist organisation and imposed sanctions on Iranian officials over actions undermining freedom of navigation and serious human rights violations.
She added that the EU stood firmly with the UK, describing it as a close partner.
Suspected cholera cases tripled in three weeks in Yemen, the World Health Organization said Tuesday, warning that the growing disease burden was straining hospitals already treating war casualties.
The country's escalating war, combined with mass displacement, is fuelling the risk of infectious disease outbreaks, the WHO said.
Overcrowding, inadequate access to safe water and disrupted health services are exposing growing numbers of people to cholera, measles and other preventable diseases, it said.
Suspected cholera cases have tripled from 217 in the week of September 6-12 to 647 in the week of September 27 to October 3, the WHO said.
The UN health agency said Yemen has reported 8,034 suspected cases and 27 deaths this year — with a quarter of the suspected cases occurring in the last four weeks.
Yemen's war — where a Saudi-led military coalition supports the government against the Iran-backed Houthis — has reignited months into the US-Iran conflict that has plunged the Middle East into crisis.
Houthi media reported that Saudi Arabia struck an oil facility near Sanaa on Tuesday, after the Saudi-led coalition ordered civilians to evacuate the site.
An AFP correspondent in Sanaa reported hearing an explosion, while a breaking news alert on the Houthis' Al-Masirah TV said "Saudi aggression targets the oil company in Al-Sabaha, west of Sanaa".
Yemen's Houthis warned on Tuesday they would target Riyadh's airport, a refinery, and an Aramco facility in Dammam if the Saudi-led coalition follows through on its threat to strike an oil facility in Sanaa.
"The Yemeni Armed Forces urge all citizens to immediately evacuate and move away from targets that our forces will strike should the Saudi enemy target" a site in Sanaa, military spokesman Yahya Saree posted on X, identifying the three targets as Aramco's headquarters in Dammam, as well as the airport and an Aramco refinery in Riyadh.
Iran is trying to hit military sites in the UK and the suspected plot to attack a US-run military air base in September is “not unique," the head of Britain's MI5 spy agency said Tuesday.
Ken McCallum, who leads the UK’s domestic security service, said Tehran is seeking to intensify its attacks in Britain beyond the traditional targets of Iranians opposed to the Islamic authorities.
That has included arson and sabotage attacks on Jewish sites that Britain says were carried out by Iranian proxies.
McCallum said another “major shift this year has been Iranian ambitions to come at harder targets, like military sites.”
The incident at RAF Fairford “is not unique. There have been other examples, not just in the UK but around the world,” McCallum said.
Yemen's Houthis warned civilians and employees to evacuate areas near Saudi Aramco facilities on Tuesday, after the Saudi-led coalition said it planned to target an oil company in Sanaa.
"The Yemeni Armed Forces warn all employees and citizens near any facility belonging to Aramco oil to evacuate it and move away from it, as it is a legitimate target for our forces," military spokesman Yahya Saree posted on X.
The Saudi-led military coalition fighting Yemen's Houthis said Tuesday that its forces intercepted three drones north of the capital Riyadh.
"Interception and destruction of 3 drones north of Riyadh city," Major General Turki al-Maliki, a spokesman for the coalition, wrote on X.
French embassy in Saudi tells citizens to avoid Riyadh, Jeddah, Dammam airports.
The Saudi-led coalition on Tuesday said it was about to warn civilians to evacuate a location in Yemen's Houthi-controlled capital ahead of an operation there.
"We will shortly issue a warning to civilians to evacuate a site in Sanaa to carry out a special operation," Major General Turki al-Maliki, a spokesman for the coalition, wrote on X.
The Embassy of India in Riyadh has issued a statement in view of the current situation. In a tweeted circular, it said: "All Indian nationals in the Kingdom of Saudi Arabia are advised to remain calm and vigilant, stay indoors in case of an aerial attack, and follow the instructions issued by local authorities through official channels.
"Indian nationals are strongly advised to refrain from circulating or reposting any videos or news related to the ongoing events."
US President Donald Trump said on Monday that he does not believe that China and Russia are helping Iran, adding that they have "too much to lose."
Trump has faced pressure over reports that Chinese and Russian entities have supplied Iran with intelligence for attacks on US troops.
Responding to comments that China and Russia are helping Iran, Trump said in a post on Truth Social: "If they are, it's at a very low level, but I don't believe they are at all."
The Red Cross called Tuesday for urgent de-escalation in the Middle East, warning that further fighting would be disastrous for tens of millions of civilians.
Yemen's civil war -- in which a Saudi-led military coalition supports the government against the Iran-backed Houthis -- reignited in July, months into the wider regional conflict that has roiled energy markets and plunged the Middle East into crisis.
"Civilians are paying an unacceptable price as a result of military operations in the Middle East," said Mirjana Spoljaric, the president of the International Committee of the Red Cross.
Saudi Arabia, the world's top oil exporter, faces a major economic contraction this year, the IMF said Tuesday, as deadly attacks by Yemen's Houthis squeeze a country already suffering from the Middle East war.
Saudi Arabia's GDP is expected to shrink by 3.3 percent, the International Monetary Fund said in its latest World Economic Outlook report, predicting a regional drop over Iran's blockading of the Strait of Hormuz.
The report was compiled before 13 people were killed on Saturday -- the deadliest attack in Saudi Arabia in more than a decade -- during a series of lethal Houthi strikes on Riyadh's international airport.
Indian carrier IndiGo has cancelled all flights to and from Riyadh, Jeddah, Dammam and Madinah until October 17, citing the “evolving situation” in Saudi Arabia. The Indian Embassy in Riyadh shared the airline’s advisory in a travel alert on X. The suspension comes a day after Yemen’s Houthis claimed a ballistic missile attack on Riyadh’s King Khalid International Airport, which the Saudi-led coalition said it intercepted. Passengers booked on affected flights are advised to check with the airline for rebooking and refund options.
The International Monetary Fund warned on Tuesday that while low-income developing countries were dealing with the disproportionate impacts of the Iran war-fuelled energy shock, many had "no choice" but to cut spending or potentially face debt restructuring.
Speaking to AFP on the sidelines of the organisation's Annual Meetings in Bangkok, IMF deputy director of research Petya Koeva Brooks said heavily indebted, oil-importing countries were facing the worst of the energy shock, and had difficult choices in helping their citizens through the crisis.
"Unfortunately, after years of the global economy being hit (by) shock after shock, debt levels have increased quite a lot, and at the same time, inflation has become a problem," she said.
The US war on Iran has plunged the Middle East into conflict and sent global energy prices soaring, as Tehran's retaliatory action targeted Washington's Gulf allies and curtailed oil and gas supplies.
Etihad Airways has cancelled a number of flights between Abu Dhabi and three Saudi cities, Riyadh, Dammam and Jeddah, warning that the situation remains fluid and further changes to its flight schedule are possible. The airline said all flights between Abu Dhabi and Riyadh had been cancelled until Monday, October 19, 2026. For services between Abu Dhabi and Dammam, Etihad cancelled flights EY575, EY576, EY573 and EY574 scheduled for Monday, October 12, along with all flights on Tuesday and Wednesday, October 13 and 14.
The International Monetary Fund (IMF) has sharply cut growth forecasts for the Middle East and Central Asia in 2026, as the ongoing war has sent economies into a tailspin.
In its latest World Economic Outlook report, the IMF said the regional economy was projected to contract by 0.3 percent, compared to its projected 1.9 percent growth six months ago.
It cited "a longer closure of the Strait of Hormuz, compared with the baseline assumptions in the April" report, predicting a major rebound in 2027 based on the expected reopening of the waterway.
Since the Middle East war began in late February with US-Israeli strikes on Iran, Tehran has sought to impose its control over the Strait of Hormuz, repeatedly attacking ships that transit without its authorisation.
Sanaa — Yemen’s internationally recognised government said its forces carried out 1,879 operations against the Iran-backed Houthis across multiple fronts as part of its ongoing “Dawn of Yemen” offensive.
Military spokesperson Col. Majeed al-Nuzaili said the operations killed 950 Houthi fighters and destroyed or disabled 380 military vehicles.
Al-Nuzaili said the operations targeted Houthi positions, command centers, weapons depots and other military assets. The announcement came as government forces pressed an offensive aimed at retaking territory still held by the group, including the capital, Sanaa. The figures could not be independently verified, and the Houthis did not immediately comment.
Iran challenged Britain to produce evidence linking Tehran to a suspected plot targeting RAF Fairford, rejecting Prime Minister Andy Burnham’s assessment that the operation was "almost certainly" directed by Iran’s Islamic Revolutionary Guard Corps.
Iran’s Foreign Ministry called the allegations unfounded, accusing London of making serious claims without presenting supporting evidence and seeking to divert attention from Britain’s involvement in US-Israeli military operations against Iran.
Burnham told Parliament that British authorities believed the suspected plot was “highly likely” to have been coordinated in Iran and “almost certainly” directed by the Revolutionary Guards.
Iran's Islamic Revolutionary Guard Corps chief, Ahmad Vahidi, warned foreign powers on Monday against threatening or interfering in the Strait of Hormuz and the Gulf, reinforcing Tehran's opposition to an expanded foreign military presence in the strategic waterway.
“No extra-regional power has the right to threaten, maintain a hegemonic presence or interfere,” Vahidi said in a post on X.
Vahidi's remarks signal that Tehran intends to maintain its claim to a central role in determining security arrangements in the Gulf. They also underline the risk that disputes over military deployments and shipping restrictions could complicate efforts to restore normal commercial traffic.
Iran has repeatedly argued that countries outside the region should not dictate security arrangements in waters bordering its territory. The United States and its partners, meanwhile, have defended their military presence as necessary to protect navigation and regional security.
At least 94 people have been killed and 33 wounded in armed attacks and security operations in southeastern Iran since March 31, with clashes becoming more frequent and involving heavier weapons, a US-based human rights group reported Monday.
The Human Rights Activists News Agency (HRANA) documented at least 63 armed incidents between March 31 and Oct. 10, mainly in Sistan and Baluchestan province, which borders Pakistan and Afghanistan.
Yemen's Iran-backed Houthis claimed an attack targeting Riyadh's international airport on Monday, after a Saudi-led coalition said it had shot down a missile over the capital.
"Our armed forces were able to target (King) Khalid International Airport in the Saudi enemy's capital Riyadh this evening with a ballistic missile and the hit was precise," Houthi military spokesman Yahya Saree said. He added that the group also targeted the Khamis Mushait base in the kingdom's south with a drone.
Grand Mufti of Saudi Arabia, Chairman of the Council of Senior Scholars, and President of the General Presidency of Scholarly Research and Ifta Sheikh Dr. Saleh bin Fawzan Al-Fawzan, has condemned Houthi attacks on civilian facilities and the killing of innocent people, including worshippers travelling to the Grand Mosque in Makkah and the Prophet’s Mosque in Madinah.
The Grand Mufti, who also chairs the Council of Senior Scholars and heads the General Presidency of Scholarly Research and Ifta, described the targeting of civilians and worshippers as among the gravest crimes.
“The terrorist Houthi militia's targeting of civilian facilities and the killing of innocent people, including worshippers heading to the Grand Mosque and the Prophet's Mosque, is among the gravest of crimes for which Allah Almighty has threatened painful punishment,” he said, according to the Saudi Press Agency (SPA).
He added that those who targeted holy sites and people travelling to the Sacred House of Allah throughout history had faced destruction and dire consequences.
“We ask Allah Almighty to put an end to these criminals and protect our country and Muslim countries,” he said.
A crude oil tanker was struck by an unknown projectile while sailing outbound through the Strait of Hormuz on October 11, the United Kingdom Maritime Trade Operations (UKMTO) said.
In a warning issued on Monday, UKMTO said it had received a delayed report from a verified source about the incident in the strategic waterway.
Authorities are investigating, the agency said. It did not provide details about the vessel, the extent of any damage or possible casualties.
UKMTO advised vessels transiting the Strait of Hormuz to proceed with caution and report any suspicious activity to the agency.
Day 227: Houthis claim attack targeting Riyadh airport
Day 226: Houthis issue new threat to Saudi Arabia’s airspace
Day 225: US, UK warn citizens to avoid Riyadh airport
Day 224: Trump eases curbs on Russian diesel imports
Day 223: Trump: No Iran attack before midterm elections
Day 222: Trump warns US may finish Iran war in a ‘not-so-nice’ way
Day 221: Iran warns US, Israel: Response to attack will be ‘devastating’
Day 220: Mecca Alliance could be 'NATO of Mid-East’ vs Houthis