meed-logo

line1 line2 line3
SIGN IN / REGISTER

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. 

https://image.digitalinsightresearch.in/uploads/NewsArticle/17056903/main.gif
Colin Foreman

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Chinese firm wins $265m Saudi hospital contract

    24 June 2026

    Zhejiang Construction International, the local subsidiary of Chinese contractor Zhejiang Construction Investment Group, has won a $265m contract to build the Prince Mohammed Bin Fahd University Speciality Hospital in Al-Khobar.

    Construction is expected to take three years from the start date.

    Prince Mohammed Bin Fahd University awarded the contract.

    Located in Al-Raja district, Al-Khobar, in Saudi Arabia’s Eastern Province, the hospital project will cover about 60,000 square metres.

    The contract covers the construction of a 10-storey hospital building, two five-storey auxiliary buildings connected by corridors and a basement.

    Work will include civil works, mechanical and electrical installation, curtain walling, landscaping, detailed design and the procurement of medical equipment.

    The award is the latest in a series of contracts secured by Chinese contractors from Saudi entities in recent months.

    Last week, MEED reported that Saudi Arabia’s Ministry of Municipalities & Housing awarded contracts worth more than SR1.9bn ($506m) to Chinese contractors for two residential developments in the kingdom.

    China Architectural Construction Corporation won the first contract, valued at SR875m ($233m), to build 2,010 housing units at the Al-Ruba residential project in Riyadh.

    China State Construction Engineering Corporation secured the other contract, valued at more than SR1bn ($266m), for the Al-Rasha Al-Faisaliah residential project in Dammam, comprising 2,426 housing units.

    GlobalData expects Saudi Arabia’s construction industry to record average annual growth of 5.2% in 2025-28, supported by investments in transport, electricity, housing and tourism infrastructure, as well as the $850bn-plus gigaprojects programme.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17412846/main.jpg
    Yasir Iqbal
  • Kuwait extends deadline for $718m drainage tender

    24 June 2026

     

    Kuwait’s Ministry of Public Works (MPW) has extended the deadline for a major drainage tender estimated to be worth about KD222m ($718m).

    The new bid submission deadline is 19 July.

    The tender scope covers the construction of rainwater drainage networks across the residential areas of Sabah Al-Ahmad, South Sabah Al-Ahmad, Al-Khairan and Al-Wafra.

    The MPW floated the tender on 22 March. The most recent deadline was 21 June.

    According to regional projects tracker MEED Projects, the works include the construction of a major concrete sewer, three collection basins and extensive stormwater drainage basins.

    Rainwater collection tanks will be connected through an independent network, with outlets to the sea via the Nuwaiseeb exit to manage overflow.

    The infrastructure will also filter pollutants such as oils, minerals and sediments to protect water quality and support environmental sustainability.

    The project aims to reduce surface runoff, prevent street and urban flooding, and improve groundwater recharge.

    Kuwait’s MPW currently has several contracts out for tender for infrastructure works across various parts of the country.

    Also, in March, the client released two additional tenders covering the construction of a treated water system in Kuwait’s southern region and another in Kuwait’s northern region.

    Bids for both projects are due by 28 June.

    Meanwhile, the MPW is planning to begin construction of the $3.3bn North Kabd sewage treatment plant, which has a planned capacity of up to 1 million cubic metres a day.

    China State Construction Engineering Corporation (CSCEC) won the contract to build the plant earlier this year.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17411675/main.jpg
    Mark Dowdall
  • Contractor wins Emaar Dubai Harbour project deal

    24 June 2026

     

    Local construction firm Al-Sahel Contracting Company has won a contract to build The Bristol Luxury Hotels & Resorts project in Dubai.

    The contract was awarded by local real estate developer Emaar Properties.

    The Bristol Luxury Hotels & Resorts is located at Emaar Beachfront in Dubai Harbour.

    The project comprises a 54-storey mixed-use building with about 150 hotel keys and 227 one- to four-bedroom apartments.

    Enabling works have been completed by local firm Dutch Foundation.

    Dubai-based Mirage Leisure & Development is the project’s consultant.

    Construction is expected to be completed by 2028.

    The contract award follows Emaar’s appointment of Dubai-based Aroma International Building Contracting to build the Address Grand Downtown tower.

    The award also comes shortly after Emaar reported strong operating momentum in 2025, led by record property sales of AED80.4bn ($21.9bn), up 16% year on year.

    The company’s revenue backlog from property sales rose to AED155bn ($42bn), supporting visibility on future revenue recognition.

    Total revenue for 2025 reached AED49.6bn ($13.5bn), a 40% year-on-year increase. Earnings before interest, taxes, depreciation and amortisation grew 33% to AED25.6bn ($7bn), while net profit before tax rose 36% to AED25.7bn ($7bn).

    Emaar’s platform continued to support performance across property development, malls, hospitality, leisure and international operations.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17411104/main.jpg
    Yasir Iqbal
  • Kuwait tenders oil manifold project

    24 June 2026

    State-owned upstream operator Kuwait Oil Company (KOC) has tendered a contract to construct remote header manifolds and associated works in the southern and eastern regions of Kuwait.

    A meeting with prospective contractors has been scheduled for 21 July 2026, and bids are due to be submitted ahead of a deadline on 20 September 2026.

    Manifolds are devices used in the oil sector to divide the flow of liquids from a single source to several outlets, or to collect liquids, or vice versa.

    Previously, a project with a similar scope in the same region was awarded to the Kuwaiti contractor Al-Ghanim International General Trading & Contracting.

    In 2016, it signed a contract worth $435m to construct remote header manifolds and associated works in the south and east Kuwait areas.

    The scope of that contract included design, procurement, construction and commissioning of 25 remote manifold stations and associated pipelines in south and east Kuwait using multi-phase pumps to deliver liquids to gathering centres.

    Kuwait’s oil fields are connected to more than 25 gathering centres, which serve as collection points for crude oil produced by several wells connected by flowlines, providing initial treatment by separating associated gas and removing salt.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17409564/main.jpg
    Wil Crisp
  • Firm wins $94m Diriyah MEP works deal

    23 June 2026

    Riyadh-based Red Sea International Company has announced that its subsidiary, Fundamental Installation for Electric Work Company (FirstFix), has won a SR352m ($94m) contract to carry out mechanical, electrical and plumbing (MEP) works for a project in Diriyah.

    The contract was awarded by Salini Saudi Arabia, the local subsidiary of Italian contractor Webuild.

    In a filing on the Saudi Stock Exchange (Tadawul), the company said the scope of work includes the supply, installation, testing and commissioning of all MEP works, as well as related engineering works.

    The contract duration is 454 days.

    In July last year, Webuild announced that it had won a $600m contract from Diriyah Company for a package for the Diriyah Square project.

    The contract relates to construction works on package three of the Diriyah Square project. It includes finishing and MEP works on more than 70 buildings and public spaces within Diriyah Square.

    These assets cover a total area of about 365,000 square metres.

    Webuild is already working on the underground multi-storey car park at Diriyah Square.

    The three-level underground car park will serve the mixed-use Diriyah Square district, which will include leisure and entertainment facilities, hotels, retail, Grade A offices, the King Salman Grand Mosque and residential units designed in the traditional Najdi architectural style.

    The car park has a floor area of 1 million square metres, with underground roads and tunnels beneath Diriyah Square, and a capacity for 10,500 cars.

    The parking facility will directly connect commuters with all of Diriyah’s destinations, including Wadi Hanifah, the Western Ring Road and a national motorway. It will be a key component of the City of Riyadh Arterial Road system.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17397460/main.jpg
    Yasir Iqbal