Iran is redrawing the global trade map - Gulf countries, billions of USD investments in Red Sea ports
The redrawing of the global trade map by the Iran war is forcing Gulf countries to readjust their investment strategy, pouring capital into infrastructure, from energy pipelines to ports, to cope with the consequences of the conflict. The war has exposed the Persian Gulf’s over-reliance on the Strait of Hormuz, through which about 20% of global oil passes but which is also subject to constant Iranian threats to close it.
With the strait virtually blocked for much of the first half of the year, a wave of billions of dollars in investment is looming on the horizon as energy exporters try to secure their economies for the future. Trade is being redirected to Saudi ports on the Red Sea and the eastern ports of the United Arab Emirates, but capacity is at a premium. Gulf governments are looking for ways to create permanent, integrated solutions to bypass the Strait of Hormuz.
While most Gulf governments can tap into oil wealth accumulated over decades, some may turn to external funds as they work toward ambitious foreign direct investment targets. The costs could exceed hundreds of billions of dollars in the coming years, and Gulf sovereign wealth funds, among the world’s largest, are already stepping in to accelerate these investments.
Ports have been a critical priority for Gulf governments, including Saudi Arabia. Abu Dhabi’s sovereign wealth fund said last week it plans to buy the rest of AD Ports, which operates in the United Arab Emirates and around the globe. Saudi Arabia has accelerated billion-dollar plans to divert oil away from the Strait of Hormuz, including an expansion of crude pipeline capacity on the western coast of the Red Sea. The economies of Qatar and Kuwait are expected to shrink by about 8% this year, according to a Reuters poll, while Saudi Arabia’s economy is expected to expand by 1.4%, after growing 4.5% in 2025.
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