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Currently, geopolitical equations are changing very rapidly in West Asia. While the increasing military tension between Iran and America has increased the concern of the entire world, amidst this crisis, Saudi Arabia has emerged as a very strong economic and strategic superpower. Global trade and oil exports from Gulf countries have been severely affected due to threats to ships in the Strait of Hormuz. Due to blockage of this route, many Gulf countries are facing huge problems, but Saudi Arabia has converted this crisis into a big opportunity with its foresight. Saudi Arabia has currently emerged as the largest trade and energy hub of the entire Gulf region.
Saudi’s old strategy worked: Red Sea and East-West pipeline flourished
When the war situation made it difficult for commercial ships to pass through the Strait of Hormuz, Saudi Arabia made good use of its decades-old infrastructure. The country’s famous ‘East-West Pipeline’ and modern ports built along the Red Sea kept the global supply chain of oil running without any interruption. The result was that in the very first month of the beginning of tension in West Asia, Saudi Arabia’s oil export revenue jumped to beyond $24.7 billion. Despite the global recession and war, this is considered to be Saudi Arabia’s biggest and record-breaking earning in the last three years.
Investors’ confidence increased: Dubai and Abu Dhabi lag, Saudi stock market is bright
Even in this turbulent and uncertain environment, global investors have expressed the most confidence in Saudi Arabia’s economy in the Gulf region. Statistics bear witness to the fact that since the beginning of the war, on one hand, the stock indices of major markets of UAE i.e. Dubai and Abu Dhabi have registered a huge decline of 10% and 7% respectively, on the contrary, the main stock index of Saudi Arabia is standing strong with a gain of about 3%. This excellent performance of the market has boosted the morale of local and foreign companies. This is the reason that while the pace of new IPOs ($IPO$) has slowed down completely in other Gulf countries, companies in Saudi Arabia are continuing preparations for their public listing without stopping.
IMF’s projections and Crown Prince Mohammed bin Salman’s vision
It is true that any prolonged war has an impact on the global economy. For this reason, the International Monetary Fund ($IMF$) has reduced Saudi Arabia’s economic growth rate estimate for the year 2026 by 0.9 percentage points to 3.1%. But it is a matter of relief that this reduction in Saudi’s estimates is the least compared to the economic injury suffered by other Gulf countries.
Economic and defense experts believe that this global crisis has given further impetus to the dream of Saudi Arabia’s Crown Prince Mohammed bin Salman, under which he wants to make the country a huge global logistics hub connecting Asia, Africa and Europe. Under this vision, Saudi Arabia is making major strategic changes in the new port being built under its most ambitious and high-tech dream project ‘NEOM$’. This new port can become the largest and safest center for European companies to do business with UAE, Kuwait and Iraq in the coming times.
The risks are still not over, but alternative paths are the future.
The path for Saudi Arabia is not entirely free from thorns. The Red Sea route remains under threat from drone and missile attacks by Yemen’s Houthi rebels, increasing security challenges. Despite this, major analysts around the world believe that even if the Strait of Hormuz is completely secured and restored in the future, Gulf countries and global business companies will no longer make the mistake of relying on only one sea route. Gulf countries will now continue to invest heavily in alternative trade routes and strong pipeline networks, which is sure to provide direct and long-term benefits to Saudi Arabia in the coming decades.
