Gaza conflict puts region on edge again
26 December 2023

For much of 2023, the defining narrative for the Middle East was one of reconciliation. From Iran and Saudi Arabia agreeing to rekindle diplomatic relations under a China-brokered deal in March, and Syria’s President Bashar al-Assad being welcomed to an Arab League summit in Riyadh in May, leaders favoured diplomacy over division.
Not all wounds healed, but even in Yemen an unofficial truce between Houthi rebels and Saudi-backed forces largely held throughout the year.
The Hamas assault on Israel on 7 October and Israel’s response dramatically altered the picture, although whether it will lead to lasting regional change remains to be seen.
Prior to the fighting, few minds in the region were focused on the Palestinian issue, with far more attention being paid to developing commercial and security ties. Saudi Arabia was widely thought to be edging closer to normalisation with Israel, with Israeli ministers starting to visit the kingdom regularly.
Israel’s Communications Minister Shlomo Karhi was in Riyadh on 1 October for a conference. Tourism Minister Haim Katz visited for a World Tourism Organisation event a week earlier.
Such trips are now off the agenda, with Riyadh focused on leading the Islamic world in condemning Israel. On 11 November, it hosted a joint summit of the Arab League and the Organisation of Islamic Cooperation. Among the attendees was Iran’s President Ebrahim Raisi – the first visit by an Iranian president to Saudi Arabia since 2012. Raisi used the occasion to invite Crown Prince Mohammed bin Salman al-Saud to visit Tehran, a sign that the pre-war trend for reconciliatory diplomacy has not entirely disappeared.
The Gaza conflict has been particularly difficult to navigate for Abraham Accord signatories Bahrain, Morocco and the UAE. Bahrain suspended economic ties with Israel, but there has been no sign from any of the three of wanting to break off relations altogether.
“How far the war goes will determine how the relationship [with Israel] develops,” said one analyst.
Some other diplomatic gains are also being made against the backdrop of the war. Qatari Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani travelled to Manama on 17 November as part of an energetic diplomatic push to bring the Israeli/Palestinian war to an end.
Sheikh Mohammed held talks with Prime Minister and Crown Prince Salman bin Hamad al-Khalifa, and they agreed to revive long-abandoned plans to build a ‘friendship bridge’ between the countries.
Navigating the multi-polar world will remain a key challenge for Gulf powers in the year ahead
Another trend evident in recent years has also continued – namely the efforts by some Gulf powers to dilute their ties with Western allies and build stronger links with China, Russia and others.
A clear sign of this came in August when the UAE and Saudi Arabia were invited to join the Brics grouping of major non-Western economies. They are set to formally join in January.
But in an indication of their desire to maintain links with all sides, Saudi Arabia and the UAE then signed up to the India-Middle East-Europe Economic Corridor (Imec) initiative at the G20 summit in New Delhi, India, in mid-September.
Navigating the increasingly multi-polar world will remain a key challenge for Gulf powers in the year ahead.
Imminent peril
In other parts of the region, the situation holds more immediate peril. In Egypt, the economy is in a parlous state, with President Abdul Fattah al-Sisi relying on Gulf allies to prop up an economy facing over $29bn of debt repayments in 2024.
Neighbouring Libya remains divided between rival administrations with their own regional allies. Turkiye and Qatar have supported the Tripoli-based government of Prime Minister Abdulhamid al-Dbeibah, while Egypt, Saudi Arabia and the UAE back General Khalifa Haftar and his Libyan National Army in the east.
In Sudan, the UAE-backed Rapid Support Forces (RSF) have been fighting President General Abdel-Fattah Burhan’s Sudanese Armed Forces in a vicious civil war since April. Peace talks in Riyadh in late September failed to deliver a ceasefire, and the UAE has been implicated in the delivery of weapons to the RSF.
Tunisia is quieter, but the economy is in a delicate state and the lurch towards authoritarian dictatorship under President Kais Saied is making observers nervous.
Tensions between Algeria and Morocco are also problematic. The two countries have long been at odds over Western Sahara, but relations have become more strained in recent years, with Algiers severing diplomatic ties in 2021. Algerian coast guards killed two Moroccans in August 2023 when they strayed into Algerian waters on their jet skis – an incident that could have readily escalated.
In Iraq, political disagreements came to the fore in November when the Supreme Court removed parliamentary speaker Mohammed al-Halbousi – the country’s most powerful Sunni politician – from office. Iran-backed Iraqi militias have also been flexing their muscle since the Gaza war, launching dozens of attacks on US forces in the country.
Other Iraqi court rulings have also caused disquiet, particularly a September decision by the Constitutional Court to annul a bilateral treaty on sharing the Khor Abdullah waterway with Kuwait.
Iran meanwhile weathered the protests that erupted in the wake of Marsa Amini’s death in September 2022. Tehran’s emerging challenge is in managing the response of its regional allies to the Gaza conflict. The actions of its other allies
in the region – including the Houthis in Yemen and Hezbollah in Lebanon – could set the tone for the whole region in the year ahead.
Image: Smoke rises after Israeli air strikes on the city of Rafah in the southern Gaza Strip on 10 October 2023
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Fuel storage facility attacked in Bahrain13 March 2026
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Fuel storage tanks at a facility on Bahrain’s Muharraq Island were targeted in an attack attributed to Iran, according to a statement from Bahrain’s Interior Ministry.
The ministry put out an alert for people in surrounding neighbourhoods “to remain in their homes, close windows and ventilation openings, as a precautionary measure against possible exposure to smoke”.
Videos of the incident, which took place on 12 March, showed a large fire emitting black smoke. The fire was later extinguished by teams of firefighters.
Bahrain’s international airport is also located on Muharraq Island.
Iran has been firing missiles at a range of targets in nearby countries since it was attacked by the US and Israel on 28 February.
On 11 March, a similar attack on fuel storage tanks in Oman led to the closure of some terminals at the port of Salalah.
Footage recorded by vessel crews at the port, which is the largest in the country, showed explosions and a large fire.
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Bahrain contacts engineering companies over Sitra refinery damage13 March 2026
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Bahrain’s national oil and gas company Bapco Energies is in touch with international engineering companies about damage done to the Sitra refinery by Iranian strikes, according to industry sources.
In a statement on 9 March, Bapco Energies said its decision to issue the force majeure notice followed “the recent attack on its refinery complex”, without providing details.
Bapco Energies is yet to share full details about the extent of the damage caused to the refinery, sources said.
One source said: “Bapco has been corresponding with several companies with regard to the damage. It is being careful not to share confidential information, but it has reached out.”
Prior to Bapco’s 9 March statement, the Sitra refinery was hit by a strike earlier in the day.
That strike on the Sitra refinery was the second strike on the complex in days.
Iranian missiles hit the facility on 5 March, resulting in parts of the refinery being engulfed in flames.
Iran has been firing missiles at a range of targets in nearby countries since it was attacked by the US and Israel on 28 February.
In November last year, MEED reported that Bapco Energies was in the final stages of ramping up volumes processed by new units that were installed as part of the Bapco Modernisation Programme (BMP).
The project at the Sitra refinery in Bahrain is estimated to have been worth $7bn and was inaugurated by Bahrain’s King Hamad Bin Isa Al-Khalifa in December 2024.
At the time, the companies involved in the engineering, procurement and construction (EPC) contract for the project were still working on the site to assist with efforts to increase volumes.
Bapco Energies awarded the main $4.2bn contract to perform EPC works on the BMP to a consortium led by France’s Technip Energies in February 2018.
The consortium also included Spain’s Tecnicas Reunidas and South Korea’s Samsung E&A.
Technip Energies also performed the project’s front-end engineering and design work. US oil and gas producer Chevron acted as a consultant on the BMP, while Australia-based Worley was the project management consultant.
In March 2024, after a series of setbacks and delays, France’s Total Energies was brought in to support Bapco in “optimising” the project.
The BMP is central to Bahrain’s Vision 2030 economic development strategy, and Bapco has said that it is crucial to boosting the country’s long-term downstream potential.
The BMP was originally expected to reach mechanical completion in 2023, with operations set to begin in 2024.
The core objective of the BMP was to upgrade the Sitra refinery – Bahrain’s only oil refining asset, which is 90 years old.
One of the key units to be built as part of the BMP was a residual hydrocracking unit (RHCU) powered by technology licensed from US-based Chevron Lummus Global. The BMP team has built a two-train RHCU with a capacity of 65,000 barrels a day.
The Sitra refinery includes seven crude distillation units (CDUs) and vacuum distillation units (VDUs) as part of the BMP.
The new 225,000 b/d integrated crude and vacuum unit replaced CDUs 1, 2 and 3 and VDUs 1 and 3, which had served Bapco Energies for over 80 years.
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Italian consultant wins Egypt battery storage contract13 March 2026
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In March, a group comprising China Energy Engineering International Group, Zhejiang Thermal Power Construction and Southwest Electric Power Design & Research Institute was appointed as the main engineering, procurement and construction contractor.
The $250m project also includes the construction of a 220kV substation, upgrades to an adjacent substation and development of grid network connection infrastructure.
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Egypt’s utilities sector had its strongest year in over a decade in 2025, hitting $5bn in contract awards for the first time since 2015.
Last July, Amea Power commissioned Egypt’s first-ever utility-scale bess.
The 300MWh project had previously reached financial close in June.
The bess project is an extension of Amea Power’s operational 500MW solar photovoltaic plant in Aswan Governorate, which was commissioned in December 2024.
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Oil tankers attacked in Iraqi waters12 March 2026
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Two tankers carrying Iraqi oil products were set on fire after being attacked in Iraq’s territorial waters near the country’s southern export terminals, increasing concerns about global energy supplies.
After the attack, the country’s Oil Ministry said that it saw the attacks as “a worrying indicator of escalating tensions in a vital area of the global economy and energy supply”.
It added that “the safety and safety of navigation in international sea corridors and energy supply routes should be kept away from regional conflicts”.
The Oil Ministry said the attacks had a direct impact on the stability of the global economy and energy markets, as well as putting the lives of civilians and workers in the maritime transport sector at risk.
Farhan Al-Fartousi, from Iraq’s General Company for Ports, told state television that one crew member had been killed in the attack and that 38 crew members had been rescued.
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The second targeted vessel, Safesea Vishnu, was sailing under the Marshall Islands flag and was chartered by an Iraqi company, according to Somo.
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Chevron yet to agree terms for Iraq oil field takeover12 March 2026

US-based oil company Chevron is yet to agree terms with Iraqi state-owned Basra Oil Company (BOC) for its potential takeover of Iraq’s West Qurna-2 oil field, according to industry sources.
Last month, Chevron signed a preliminary agreement with BOC to explore taking control of the West Qurna-2 oil field.
Until recently, West Qurna-2 was operated by Russia’s Lukoil, which faces a 28 February deadline to divest its assets in Iraq under sanctions.
One industry source said: “Chevron is yet to agree terms, and it has made it clear that it wants different terms to the contract that Lukoil had.”
In January, Iraq’s cabinet approved temporarily nationalising petroleum operations at the West Qurna-2 oil field until a new operator was found.
Lukoil declared force majeure at the West Qurna-2 oil field in November, after sanctions by the UK, EU and US were announced in October.
The Russian company had a 75% stake in the asset.
Prior to Russia’s Lukoil declaring force majeure, Iraq’s state oil authorities froze all cash and crude payments to Lukoil in compliance with the sanctions.
In a statement released on 1 December 2025, Iraq’s Oil Ministry said that it had extended “direct and exclusive invitations to a number of major American oil companies”.
Awarded to Lukoil in 2009, West Qurna-2 lies about 65 kilometres northwest of Basra in southern Iraq and produces about 480,000 barrels a day (b/d) of oil, accounting for roughly 10% of the country’s total oil output.
At the same meeting on 23 February, Chevron also signed a deal relating to the development of the Nasiriyah field, four exploration sites in the province of Dhi Qar and a field in the province of Salahaddin.
Chevron signed an agreement in principle with Iraq in August 2025 to develop the Nasiriyah oil project in the province of Dhi Qar.
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