9%. 5% increase. Hermes said the sales drop had particularly impacted the United Arab Emirates, as well as in Kuwait, Qatar and Bahrain.
According to Hermes, the company faces a near-term revenue risk as Middle East luxury sales plunge 50% this month. 8% as wealthy spenders stayed away, the company reported. Sales at Europe's biggest luxury brands have shrunk in Dubai and Abu Dhabi as the Iran conflict hit the sector's fastest-growing market, according to industry reports.
Luxury brands in March reported sales drops of 30 to 50 percent at the Mall of the Emirates in Dubai compared to the same month last year. Footfall at the Mall of the Emirates dropped by 15 percent in March, reports indicate. LVMH said the conflict shaved around 1% off sales growth in the first quarter of the year.
Hermes said its bags had helped drive sales despite a downturn in the luxury market since the post-pandemic splurge cooled off, with sales in this division up 9% in the first quarter. Hermes is expanding production with a 25th leather workshop in 2026, adding 500-760 jobs globally. 3% for core leather bags.
US and Israeli military strikes on Iran have sent global oil and gas markets spiraling, according to market analysts. Oil prices have risen significantly from prewar levels, with reports indicating prices near $100 per barrel or soaring to close to $120 per barrel. International prices for LNG have jumped more than 50%, market data shows.
The de facto closure of the Strait of Hormuz and damage to regional infrastructure have produced the largest disruption to the global oil market in its history, according to the International Energy Agency. A disruption in the Strait of Hormuz leads to a global spike in crude oil prices due to well-integrated global oil markets, energy experts note. About 20-30% of global oil and 20% of liquefied natural gas pass through the Strait of Hormuz.
About 20 million barrels of oil pass through the Strait of Hormuz each day, according to estimates from the US Energy Information Administration. Energy shipments from the Middle East have been at a standstill following Iran's threats to attack vessels that pass through a critical trade waterway as retaliation against US-Israeli strikes. US drivers are facing higher prices at the pump due to soaring crude oil costs, according to industry reports.
The war in the Middle East is upending lives and livelihoods in the region and beyond, dimming the outlook for many economies, analysts say. Economies heavily dependent on oil imports in Africa and Asia are finding it increasingly hard to access supplies, even at inflated prices. Low-income countries are especially at risk of food insecurity due to higher food and fertilizer prices and tighter financial conditions, according to economic assessments.
Dubai's buildings and infrastructure, including its landmark Burj Al Arab luxury hotel and parts of its giant airport, were hit by Iranian drone attacks. The Middle East accounts for roughly 5 percent of global luxury consumption, industry data indicates. The exact current oil price remains uncertain, with reports varying between stabilization near $100 per barrel and fluctuations up to $120 per barrel.
The specific timeline for when shipments through the Strait of Hormuz might resume is unclear. The full extent of damage to Dubai's infrastructure from Iranian drone attacks has not been fully assessed. Whether other luxury brands beyond Hermes and LVMH are experiencing similar sales drops in the Middle East remains to be seen.
The duration and long-term economic consequences of the conflict on low-income countries facing food insecurity and energy-importing nations in Africa and Asia cannot yet be determined.