S&P Affirms Kuwait's AA- Credit Rating Amid Strait of Hormuz Disruption

S&P Global Ratings has reaffirmed Kuwait's strong 'AA-/A-1+' sovereign credit ratings with a stable outlook, even as ongoing Middle East conflict continues to disrupt the country's oil exports through the Strait of Hormuz. The decision was released ahead of the agency's scheduled May 22, 2026 review, reflecting the urgency of the regional situation.

Kuwait has cut oil production by more than half and issued force majeure notices to buyers following the strait's effective closure. As a result, the country's current account surplus is expected to narrow to around 16% of GDP in 2026, down from approximately 24% the previous year. Economic growth is also projected to slow, with real GDP expansion forecast to fall just below 1.0% this year compared to roughly 2.0% in 2025.

Despite these headwinds, Kuwait's financial position remains remarkably strong. S&P estimates the government's consolidated net asset position at 490% of GDP in 2026, with liquid assets averaging around 521% of GDP through 2029. These substantial buffers — largely built through the Kuwait Investment Authority, the country's sovereign wealth fund established in 1953 — are expected to absorb the financial shock of prolonged oil disruptions.

On the fiscal side, Kuwait's deficit is projected to spike to 17% of GDP in 2026 and average 12% annually through 2029, up from an estimated 8% in fiscal year 2025. The government plans to cover shortfalls through debt issuances and withdrawals from the General Reserve Fund.

Regionally, Iran has continued launching missile and drone strikes on Kuwaiti and Gulf Cooperation Council infrastructure in response to U.S. and Israeli military operations. Kuwait's defense systems have successfully intercepted most incoming projectiles. S&P noted that Kuwait Petroleum Corp. is positioned to resume full production capacity once the Strait of Hormuz reopens and security conditions stabilize.