The ongoing conflict involving Iran has prompted Gulf nations to significantly increase investments in infrastructure as they seek to mitigate the impact on regional trade routes and energy exports. The war has disrupted traffic through the Strait of Hormuz, a critical chokepoint that previously handled roughly 20 percent of global oil shipments but which has been virtually blocked for much of the past six months. This has exposed the Gulf’s heavy reliance on the strait and forced energy exporters to diversify their logistics and transport networks.
In response, Gulf countries are redirecting trade flow to alternative ports along the Red Sea in Saudi Arabia and the eastern ports of the United Arab Emirates, although these facilities currently have smaller handling capacities. Governments are now prioritizing the development of permanent, integrated infrastructure solutions to bypass the strait, according to industry sources familiar with the region’s strategic planning.
The scale of investments required to transform the Gulf’s transportation and energy export framework could reach hundreds of billions of dollars over the coming years. While many Gulf states can draw upon their substantial sovereign wealth funds, some may also seek external financing to meet ambitious foreign direct investment targets. Sovereign wealth funds such as Abu Dhabi’s L’IMAD are already moving aggressively; L’IMAD recently announced plans to acquire the remaining shares of AD Ports to realign the company’s strategy. AD Ports’ UAE container throughput and cargo volumes fell by approximately two-thirds year-on-year in the second quarter, reflecting the severe disruptions faced during what the company described as one of the most challenging periods in its two-decade history.
Dubai-based DP World, among the world’s largest port operators, also experienced a decline in business in the first half of the year. The company is advancing the development of two container terminals in Fujairah, where a new crude oil pipeline designed to double export capacity is expected to come online next year. DP World is also expanding inland container depots within the UAE to improve logistical resilience.
Industry executives such as Zin Bekkali, CEO of Silk Invest, noted that Gulf governments have ample capital to internally support much of the infrastructure expansion. Saudi Arabia is accelerating billion-dollar projects aimed at redirecting oil flows away from the Strait of Hormuz, including expanding its crude pipeline capacity to the Red Sea coast, potentially enabling neighboring countries to transport more oil without crossing the strait.
Beyond shipping disruptions, the war has affected industries including oil refining, aluminum production, data centers, and air travel, with tourism and business activity remaining below pre-conflict levels across the region. The crisis has also called into question the perception of Gulf hubs as stable investment and trading centers.
Countries such as Qatar, a major liquefied natural gas exporter, face heightened challenges due to their complete dependency on the strait for shipments as well as production shortfalls linked to damaged energy facilities. In parallel, Kuwait Petroleum Corporation is negotiating with Saudi Arabia and the UAE to expand pipeline capacity for its crude exports. Iraq is pursuing alternative export routes through Turkey’s Ceyhan port and developing new pipeline connections to Syria’s Baniyas and Jordan’s Aqaba ports.
While partial reopening of the Strait of Hormuz has occurred recently, overall trade remains constrained amid ongoing tensions between Iran and the United States. The strait continues to be a focal point of geopolitical dispute, driving Gulf states to seek lasting infrastructure solutions that reduce dependence on this vital and vulnerable maritime passage.