Gulf States Plan Billions in Debt for Hormuz Bypass Infrastructure as Iran War Enters 6th Month
Updated
Updated · Bloomberg · Jul 24
Gulf States Plan Billions in Debt for Hormuz Bypass Infrastructure as Iran War Enters 6th Month
3 articles · Updated · Bloomberg · Jul 24
Summary
Saudi Arabia, Kuwait, the UAE and Qatar are preparing to raise billions of dollars to fund infrastructure that can move energy exports outside the Strait of Hormuz.
The borrowing push reflects mounting concern that the six-month Iran war has left the key waterway vulnerable to Iranian attacks, threatening the route used for most regional energy shipments.
Projects under consideration include new ports on the Red Sea or Gulf of Oman, rehabilitation of ageing pipelines and upgrades to desert road networks.
Traders expect the plans to trigger a sharp increase in debt issuance from Persian Gulf sovereigns as oil exporters finance costly new export corridors.
As Gulf debt hits a record $112 billion, will soaring infrastructure costs and rising yields bankrupt their ambitious energy security plans?
Can Saudi Arabia's pipeline expansion truly save global oil markets if its only Red Sea exit terminal remains a crippling bottleneck?
With Red Sea ports facing Houthi threats, are the Gulf's multibillion-dollar bypass projects just trading one deadly chokepoint for another?
The 2026 Strait of Hormuz Crisis: How a 95% Collapse in Gulf Oil Exports Reshaped Global Energy, Finance, and Security
Overview
The July 2026 closure of the Strait of Hormuz, triggered by the US-Israeli war on Iran, caused a 95% drop in maritime traffic and choked off a fifth of the world’s energy supply. This shock sent oil prices soaring and forced Gulf states to urgently maximize land-based bypass pipelines, but these could not fully replace lost capacity. The crisis led to record borrowing for new infrastructure, widened credit spreads, and deepened economic strain, including mass layoffs of migrant workers and a collapse in tourism. As confidence in US security guarantees eroded, Gulf states shifted toward self-reliance and new partnerships, while the global energy market faced lasting volatility and accelerated moves toward renewables.