Translated with AI assistance
The closure of the Strait of Hormuz hit the Persian Gulf countries harder than most previous oil crises: oil and gas supplies were reduced, aviation was disrupted, and logistics and insurance costs rose. Nevertheless, the economies of the Gulf Cooperation Council (GCC) managed to keep a significant portion of their businesses running and quickly redirect trade flows. How this proved possible is analyzed in an article published on the World Economic Forum platform by Bahrain’s Minister of Sustainable Development, Noor Ali Al-Khulaif.
The key takeaway is that the Gulf countries had been preparing for such disruptions long before the current conflict. Over the past few decades, they have simultaneously diversified their economies, created alternative transport corridors, invested in digital government services, and accumulated financial reserves. As a result, the oil crisis has tested this infrastructure on a real scale for the first time.
One of the main safeguards is the growth of the non-oil sector. In the UAE, it accounts for 75.5% of GDP, according to data from the country’s Ministry of Economy for 2024. In Bahrain, non-oil industries contributed 85.8% of GDP in 2025, while in Saudi Arabia, non-oil activity made up 55% of GDP.
Thus, Bahrain, Saudi Arabia, and the UAE, where non-oil sectors already account for a significant share of the economy, have gained additional protection against the crisis.
However, while diversification helped the region weather the storm, it by no means made it invulnerable. The World Bank expects that the aggregate GDP of the GCC countries will contract by 4.3% in 2026 due to falling oil production, trade disruptions, and a slowdown in non-oil activity.
The second element of protection is alternative logistics. During the disruptions, the GCC launched an accelerated mode for moving cargo between the ports and airports of the member states: sealed trucks crossed borders with electronic document exchange. At the same time, the Saudi administration launched the Gulf Shuttle — a route with a capacity of up to 3,000 standard containers, linking Dammam with Bahrain, the UAE, and other ports in the region.
The infrastructure built before the crisis proved especially important. Saudi Arabia redirected a significant portion of its exports through the East-West oil pipeline to the port of Yanbu on the Red Sea. According to Reuters, around 4 million barrels of oil per day pass through it – approximately 4% of global supply.
Another outcome of the crisis is the economic return on investment in digital infrastructure. In Bahrain, about 85% of government operations had already been migrated to the cloud under the Cloud-First Policy, which has been in effect since 2017. This made it possible to maintain the operation of government services, courts, and payment infrastructure.
In the UAE, schools and universities were able to switch to distance learning within a few days, while financial and government digital platforms continued to operate remotely.
Governments and central banks quickly mobilized financial reserves. Dubai allocated $272 million to support the tourism sector, while Bahrain’s Tamkeen fund launched an assistance program for more than 7,000 small and micro enterprises.
The Central Bank of Bahrain announced a $19 billion liquidity support package and temporary loan repayment holidays. By the end of July, UAE banks had deferred loan repayments totaling $3.67 billion for more than 135,000 customers.
At the same time, major investment deals have not come to a complete halt. Aluminium Bahrain announced the acquisition of France’s Aluminium Dunkerque for $2.2 billion, Mubadala reached an agreement with Stonepeak on a $300 million joint investment in the global container business, and Indonesia’s sovereign fund Danantara closed a $533 million deal to purchase a hotel and land plots in Mecca.
The crisis has shown that the resilience of the Gulf economy is now determined not only by oil revenues and the size of foreign exchange reserves. Alternative ports and transport routes, digital infrastructure, a diversified economy, and businesses’ access to liquidity are of no less importance.
For companies from BRICS and Global South countries, this makes practical sense. The Gulf remains one of the key transport and investment hubs between Asia, Africa, and Europe; however, when operating in the region, it is increasingly important to consider not only shipping costs but also the availability of alternative routes, warehouse inventories, insurance, and backup supply chains.
As the IMF emphasizes, financial reserves can cushion a short-term shock, but they cannot replace the physical resilience of trade. That is why investments in railways, pipelines, ports, warehouses, energy grids, and backup logistics corridors are becoming for the GCC an element of economic security rather than merely infrastructure development.
