Gulf states are accelerating investment in ports, pipelines and overland transport links as the Iran war reshapes regional trade routes and highlights their dependence on the Strait of Hormuz.

The strait, which previously handled about 20% of global oil flows, has been virtually blocked for much of the past six months. Although some traffic has recently resumed, trade remains limited and there is no clear end to the conflict between Iran and the United States despite a cooling of hostilities.

Energy and cargo flows are increasingly being redirected through Saudi ports on the Red Sea and ports on the United Arab Emirates’ eastern coast. However, capacity on these alternative routes is smaller, prompting Gulf governments to examine permanent and integrated infrastructure that could reduce reliance on Hormuz.

The required investment could reach hundreds of billions of dollars over the coming years. Gulf sovereign wealth funds are expected to play a central role, while international infrastructure investors may also participate as governments pursue foreign direct investment targets.

Ports have become a critical priority, particularly in Saudi Arabia. In the UAE, Abu Dhabi sovereign wealth fund L’IMAD has announced plans to acquire the remaining shares in AD Ports as part of a strategic overhaul. AD Ports reported that its UAE container throughput and its bulk and general cargo volumes fell by around two-thirds year on year in the second quarter amid severe operational disruption.

Dubai-based DP World also recorded a decline in business during the first half. The port operator plans to develop two container terminals in Fujairah and is working on inland container depots in the UAE. Fujairah is also set to receive additional crude volumes through a new UAE pipeline expected to double oil transport capacity to the eastern port when it becomes operational next year.

Saudi Arabia has fast-tracked plans worth billions of dollars to divert oil away from Hormuz, including an expansion of its crude pipeline capacity to the Red Sea coast. The expanded system could potentially provide additional export options for neighbouring producers.

Kuwait Petroleum Corp is discussing possible pipeline expansions with Saudi Arabia and the UAE to accommodate Kuwaiti oil shipments. Iraq, meanwhile, is seeking to increase exports through Turkey’s Ceyhan port and aims to establish routes to Syria’s Baniyas and Jordan’s Aqaba through new pipelines.

Qatar remains particularly exposed because its liquefied natural gas exports depend entirely on passage through Hormuz. Damage to energy facilities has also contributed to production shortages. Beyond shipping, strikes on regional facilities have affected refineries, aluminium plants and data centres, while reduced air traffic has weighed on tourism and business activity.

Alternative land connections are also under consideration. Turkey and Saudi Arabia aim to establish a railway link through Jordan and Syria within three or four years, with other Gulf countries expected to join. The broader infrastructure push reflects a growing view that backup trade and transport corridors are necessary even when they may initially appear uneconomical.