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Gulf races to reroute trade

1 June 2026

 

The Strait of Hormuz has been the jugular vein of global energy markets for decades. A mere 33 kilometres (km) wide at its narrowest point, the maritime chokepoint has historically carried roughly one-sixth of the world’s oil consumption and one-third of its liquefied natural gas.

With Iran effectively closing the strait in 2026, the Gulf has been forced into an accelerated search for alternative shipping routes – not only for oil exports leaving the region, but also for the imports of food, consumer goods and industrial inputs that keep Gulf economies running.

Fujairah expansion

The importance of alternative logistics routes was illustrated on 17 April, when UAE President Sheikh Mohamed Bin Zayed Al-Nahyan conducted a high-profile inspection of Fujairah port. During the tour, the leadership reviewed operations intended to ensure business continuity at the highest levels of efficiency and affirmed the port’s role as a key UAE asset supporting the international energy market. 

Data released after a visit by the Minister of Energy and Infrastructure Suhail Mohamed Al-Mazrouei on 30 April underscored the scale of the shift. He said that since the spike in tensions, container handling had surged past 262,000 units at eastern ports. To sustain flows, about 4,800 trucks are operating daily, supported by a network monitoring 1,200 vessels within UAE waters.

Fujairah port’s throughput has increased twentyfold, while daily truck movements have risen thirtyfold compared to pre-crisis levels. The storage footprint has expanded to over 7 million square metres. Crucially for regional partners, Fujairah has dedicated areas to handle more than 2.8 million metric tonnes of bulk cargo arriving from other GCC countries.

The strategic importance of Fujairah was underlined on 4 May when Iran launched 12 ballistic missiles, three cruise missiles and four drones targeting the emirate, setting an oil facility ablaze and injuring three Indian nationals. 

On the same day, an Adnoc- affiliated crude oil tanker was struck by drones while transiting the strait.

The attack on the Fujairah Oil Industry Zone targeted a hub hosting major midstream players including Saudi Aramco, Vopak Horizon and Adnoc.

Fujairah also serves as the terminus for the 300km Abu Dhabi Crude Oil Pipeline (ADCOP), linking the Habshan oil facility to the eastern seaboard and enabling the UAE to export a significant portion of Murban crude without entering the Gulf.

Fujairah’s strategic importance will grow further. The West-East crude oil pipeline that Abu Dhabi National Oil Company (Adnoc) is building from Jebel Dhanna in Abu Dhabi to the emirate of Fujairah is set to be commissioned in 2027.

Following a meeting of Adnoc Group’s board of directors on 15 May, the Abu Dhabi Media Office issued a statement saying that Sheikh Khaled Bin Mohamed Bin Zayed Al-Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council,  “directed Adnoc to accelerate delivery of the project, as the company moves forward into a new phase of world-scale project execution to meet global energy demand”.

The cross-country project involves constructing a pipeline to transport crude from Adnoc’s main export terminal at Jebel Dhanna to the Fujairah terminal, a distance of about 520km. Once commissioned, it will double Adnoc’s crude export capacity through Fujairah on the Indian Ocean coast, enabling shipments to bypass the geopolitically sensitive Strait of Hormuz.

The West-East crude oil pipeline will double Adnoc’s crude export capacity through Fujairah

Import routes

Diversifying export routes for crude is only one dimension of the post-Hormuz landscape.

The broader GCC economy must also keep goods flowing in. Food, consumer goods, construction materials, medical supplies and spare parts are all vital to Gulf economies. To help maintain a steady stream of imports, a ‘Green Corridor’ was activated on 13 March between Dubai and Oman. It allows goods destined for the UAE to be offloaded at Omani seaports such as Sohar or Salalah and transported by land through the Hatta border.

Retail and logistics players have tested unconventional routes as well. UAE supermarket chain Spinneys conducted a trial shipment of dry goods from the UK involving Mediterranean Sea crossings to Egypt and overland transit through Saudi Arabia, including the use of the Port of Neom on the Red Sea coast.

Logistics hub

On 20 May, Fujairah Terminals, part of AD Ports Group, announced the signing of three strategic land lease agreements with Fujairah International airport, Fujairah Free Zone Authority and Al-Dahra Agriculture Trading. The agreements aim to enhance connectivity and unlock new commercial opportunities across regional and international markets, while supporting the development of logistics and industrial capabilities and enabling more efficient use of port and adjacent infrastructure.

The leased lands have a combined area of 130,000 square metres and will be used to enhance Fujairah Terminals’ logistics capabilities, reinforcing Fujairah’s role as a key gateway for regional and global trade and supporting the UAE’s position as a leading hub for logistics, maritime services and industrial growth.

Saudi Arabia is also using its pipelines to bypass the Hormuz. Saudi Aramco’s East-West pipeline has reached its maximum capacity of 7 million barrels a day. Aramco president and CEO Amin Nasser recently said the company’s first-quarter performance reflected “strong resilience and operational flexibility in a complex geopolitical environment”, describing the pipeline as a “critical supply artery” that mitigated the impact of a global energy shock.

For other Gulf countries the options are more limited. Shipping monitors have reported that Kuwait recorded zero crude exports in April – the first such occurrence since the 1991 Gulf War. Kuwait normally ships almost all of its 3 million barrels a day (b/d) of exports through Hormuz. Output reportedly fell to 500,000 b/d in March as storage reached capacity. With oil sales accounting for roughly 90% of government revenue, the effect on the Kuwaiti treasury has been severe. 

Bahrain and Qatar have similar geographical challenges.

The crisis has revived talk of multinational pipelines bypassing the strait. A working paper from Rice University’s Baker Institute for Public Policy proposes a Gulf Super Express Pipeline that would begin in southern Iraq’s Basra oil fields, cross Kuwait, run along the Saudi coast to pick up additional volumes, then cross the UAE and terminate on Oman’s Arabian Sea coast at Duqm and Salalah. The proposal envisages twin 56-inch lines with a combined capacity of 10 million b/d, and includes $10.1bn for defence and hardening. Total capital expenditure is estimated at $55.6bn. 

Proponents argue the security premium could be $1-$2 a barrel to ensure that half the region’s exportable capacity remains accessible should the Strait of Hormuz be closed.

These projects will create a steady workload for the construction industry in the years ahead

Rail revival

For other goods, rail is increasingly being promoted as the key to resilience. 

The GCC has upcoming rail projects worth more than $140bn. An important project is the Hafeet Rail scheme, which is a 238km line connecting Oman’s port of Sohar to the UAE’s Etihad Rail network. As of April 2026, the project is 40% complete. Once operational, a single freight train would be able to transport 15,000 tonnes of cargo – equivalent to 270 standard containers – providing a high-capacity, land-based alternative to coastal shipping.

Future projects linking GCC states are being accelerated too. On 7 May, Saudi Arabia Railways began the procurement process to deliver its portion of the GCC railway, which will connect all six member states. The kingdom’s section of the railway will start at Al-Khafji in the Eastern Province, near the border with Kuwait, and end at Al-Batha, at Saudi Arabia’s border with the UAE. The Saudi section will span approximately 672km and interface with the Kuwait National Rail Road project on the Kuwaiti side. 

The wider GCC railway network will span 2,186km, beginning in Kuwait, passing through Dammam in Saudi Arabia, reaching Bahrain via a planned causeway, and continuing onwards to Qatar, the UAE and Oman through the Hafeet Rail link.

These projects – encompassing pipelines, ports, railways and associated roads – will  create a steady workload for the region’s construction industry in the years ahead and, more importantly, will enhance the GCC’s economic resilience following the closure of the Strait of Hormuz. 

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Colin Foreman

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  • Caution governs Jordanian bank lending

    12 June 2026

     

    In a region where geopolitical turbulence has amplified by an order of magnitude, Jordan is managing to stand out as a beacon of relative stability, with the Hashemite kingdom’s banking sector acting as a case in point.

    Lending has grown in recent years, with credit up by an average 4.9% between 2020 and 2025, according to the Central Bank of Jordan (CBJ) – a faster rate than average nominal GDP growth of 2.3% over the same period.

    The IMF took care to note an increase in credit to the private sector in its latest Article IV assessment of Jordan, standing at 80.1% of GDP at end-2024, compared to just 66.6% 10 years earlier.

    Banks in the kingdom ended 2025 in a liquid state, but caution remains the watchword for local lenders. The loan-to-deposit relationship bears that out. For that year, deposits ended up 7.1% to JD50bn ($70.5bn), while credit facilities were up just 3.7% to JD36.1bn ($50.9bn).

    Analysts see this as a case of Jordanian banks being prudent, given the tricky operating environment and limited lending opportunities, rather than banks being excessively defensive. 

    According to Christos Theofilou, an analyst at Moody’s Investors Service, it is cautious lending in fraught macroeconomic conditions.

    “On the one hand, we’ve seen a structurally strong and stable deposit base that has been growing more compared to lending. That indicates a certain degree of limited risk appetite, but also the fact that, given the challenging operating conditions, there were limited business opportunities in the market,” says Theofilou.

    Liquidity banked

    Jordan’s banks look able to withstand further shocks, given solid capital positions and relatively strong earnings performances. Arab Bank, the largest lender, saw net profits grow 12% last year to $1.13bn, despite a highly charged geopolitical situation across Jordan and the neighbouring Palestinian territories.

    As Moody’s notes, Jordanian banks’ funding base remains stable, with banks mainly deposit-funded – with deposits at 67% of total assets as of December 2025 – mostly comprising well-diversified retail deposits. The ratings agency noted that banks retain the capacity to increase lending without relying on more volatile and costly external funding, as indicated by the 72% loan-to-deposit ratio.

    The earnings outlook in Jordan may be better than other banking sectors in the immediate region, but this does not translate into a picture of booming profits going forward.

    “Profits should remain resilient, but we’re not expecting any significant improvement,” says Theofilou. “We have the challenging operating conditions, and the lower interest rates that have come down over the past few years. On the other hand, banks have had lower provisioning in the past 12 to 18 months compared to the period prior to that.”

    Asset quality remains a strong point, despite some weakening over recent years. Moody’s sees non-performing loans (NPLs) falling below 5.5% this year from 5.8% in June 2025.

    However, the continuing Iran conflict and its deleterious regional impacts – including on the West Bank, where about 9% of Jordanian banks’ loans are located – suggest that bank exposures to troubled sectors will require focus.

    Concentration bites

    Another challenge is the banks’ high credit concentration among large corporates, with a noted high exposure to real estate.

    Commercial and residential real estate loans accounted for 17.4% of total credit facilities as of year-end 2024, while residential mortgages accounted for 40.9% of household credit. Regulatory oversight may limit the impacts – the CBJ caps loans for real estate at 20% of local currency customer deposits.

    The real estate exposures are meaningful, but Moody’s views overall concentration risk as more material rather than real estate risk per se.

    “So, on the one hand, Jordanian banks have real estate loans, both commercial and residential, slightly below a fifth of the total credit facilities,” says Theofilou. “Banks also face challenges in quickly disposing of properties, but within the context of a relatively lengthy foreclosure process. On the flipside, we see Jordanian banks having fairly high collateralisation, so they do hold a lot of collateral against the real estate exposures.”

    The CBJ has earned plaudits for its regulatory oversight, with the IMF lauding its strengthening of the Financial Stability Committee, while refocusing its role on macroprudential policies and systemic risks. 

    Jordanian banks’ brisk uptake of digital technologies has also been a positive.

    Last year, digital payment systems in Jordan recorded over 184 million digital transactions, exceeding $38bn in value. The CBJ has introduced an AI regulatory framework for the sector and the authorities are now working to burnish the country’s credentials as a fintech hub, based on a 90% plus internet penetration. 

    In the year ahead, Jordanian banks will be looking to find exposures to new lending opportunities, given the past risk aversion that has prevented them from building stronger growth avenues.

    Projects beckon

    Big new infrastructure projects could yet come to the fore as bankable opportunities for local players. For example, the National Water Carrier Project, costed at $5.8bn and aiming to increase water supply by 40%, is looking to achieve financial close this summer. It is the type of project that could prove significant in helping diversify local lenders’ exposure away from real estate towards infrastructure.

    “If we see a lot of these infrastructure projects requiring financing coming to the market, then we could see a bit of a pickup in lending growth as well,” says Theofilou.

    New lending opportunities will come from large corporates and infrastructure-related lending. Those will play the key role in any significant pickup in credit growth, says the Moody’s analyst, in contrast to the small- and medium-enterprise (SME) sector, which poses a different challenge for banks.

    “The SME segment does represent a potential growth opportunity and it’s supported by policy focus, however its expansion is constrained by the operating environment. The sector is exposed to high overall credit risks, and when conditions are challenging, banks tend to be more cautious in lending to the SME markets,” says Theofilou.

    So long as the regional conflict persists, banks will be inclined more towards caution than exuberance in their lending approaches. And yet that strong and stable inclination may be what serves them best in a notably turbulent year in the Middle East’s recent history.

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  • Oman tenders environmental survey consultancy contract

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    Nama Power & Water Procurement Company (Nama PWP) has issued a tender seeking consultancy firms to provide environmental and seawater quality surveys under an ad hoc services contract.

    The selected consultants will be appointed for a four-year period and engaged on an as-needed basis to undertake environmental survey work.

    According to the tender notice, the scope of work includes environmental surveys, vertical profiling of seawater quality, seawater sampling and testing, environmental and social baseline studies, and bird and bat surveys.

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    Environmental and seawater studies are typically undertaken during the early development stages of power generation, desalination and other water infrastructure projects.

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    Earlier in June, Nama PWP issued a supervisory consultancy tender for the 280MW Marsa solar IPP project in North Al-Batinah Governorate.

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  • Emirates to offer passengers insurance amid travel warnings

    12 June 2026

    Dubai-based airline Emirates is to offer its own insurance product to passengers flying to or through Dubai, as it seeks to reassure travellers deterred by government advisories against travel to the region.

    The airline’s president, Tim Clark, confirmed the move in an interview with the London-based Financial Times. He said Emirates was working with insurance companies to introduce a “reasonably priced” product that would guarantee passengers could get home regardless of whether they returned on Emirates or another carrier.

    The move is designed to address concerns that travellers could become stranded if the conflict were to restart. More than three months after fighting began, several countries continue to maintain no-fly recommendations covering Gulf routes, leaving passengers unable to obtain conventional insurance for trips to or through the region.

    “I think one of the big concerns is that if they get caught overseas and they can’t get back,” Clark said. The group was working with insurance companies “to do the right thing”, he added.

    Emirates has played a leading role in supporting Dubai’s tourism sector since Iran began targeting the UAE with missiles and drones on 28 February.

    In early June, the Department of Economy and Tourism told stakeholders attending its bi-annual City Briefing that the emirate worked closely with airports and aviation partners, including Emirates and FlyDubai, to ensure continued connectivity for travellers.

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  • Emaar announces $55bn Dubai project

    12 June 2026

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    Mohammed Alabbar, the founder of Emaar Properties, has released a statement saying that the Dubai-based real estate developer is about to announce a $55bn project in Dubai.

    On his social media channels including Instagram and X, he said: “Emaar is preparing to unveil its most ambitious project yet: a development worth AED200bn (around $55bn), commanding an extraordinary vista that brings together, in a single frame, three of the city’s timeless icons – Burj Khalifa, Burj Al-Arab and Palm Jumeirah – complete with the finest essentials of modern living, in the city of Dubai.”

    Emaar has delivered some of the world’s most ambitious real estate projects, including the world’s tallest tower, the 828-metre-tall Burj Khalifa, and the surrounding Downtown Dubai development.

    Commenting on the new project, Alabbar added: “This is no ordinary new development. It is a landmark that takes its place in the legacy of the United Arab Emirates, writing a new chapter in the story of a nation that knows no limits to its ambition.”

    In a statement on the Dubai Financial Market on 11 June, Emaar Properties said it “stands on the threshold of a historic announcement” and revealed more details about the project. It said it will have a total development value of AED200bn, with a gross floor area exceeding 4.5 million square metres.

    It added that it will include a mix of landmark residential towers, signature villas and mansions, Grade-A commercial offices, world-class retail destinations, luxury hospitality, and civic and cultural amenities. Altogether, the development will accommodate a projected population of nearly 150,000 residents. The statement also said the development will be connected to proposed metro lines.

    The exact location of the development was not revealed. Emaar has announced major projects in the past without giving precise locations. In June 2023, it announced the $20bn Oasis project. At the time, the details on the site’s location indicated it was situated in a prime location in Dubai, surrounded by high-end developments and within proximity to four international golf courses. It was later confirmed that the site sits between Damac Properties’ Lagoons development and Dubai Investment Park.   

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