(Bloomberg) — At a time when the Iran war is upending energy flows and roiling economies across the world, Saudi Arabia is scoring billions in added oil revenue and building on ambitions to become a trading hub.
Most Read from Bloomberg
Even as the war has slowed economic growth and driven a jump in defense and logistics spending, surging oil prices combined with contingency planning have bolstered revenue. Simultaneously, the kingdom’s Red Sea coast has emerged as a vital corridor to bypass the Strait of Hormuz, which has been all but closed to commerce since the war began.
“Saudi Arabia has shown it is the indispensable Red Sea backstop,” said Hesham Alghannam, a Riyadh-based scholar at the Malcolm H Kerr Carnegie Middle East Center.
That’s turning the Gulf nation into a key transit route for supply chains across the peninsula, a potential boost for Crown Prince Mohammed bin Salman’s $1.3 trillion economy. Despite those gains, the kingdom faces rising competition. Alternative trading routes are also developing on the eastern coast of the United Arab Emirates as well as in Oman. And both the UAE and Qatar have been ramping up their own energy flows.
Saudi Arabia’s revenue from oil exports jumped to a more than three-year high of $24.7 billion in the first full month of the war in the Middle East. That’s partly because a decades-old contingency plan, the East-West pipeline, allowed it to bypass the Strait of Hormuz.
Meanwhile, a vast network of Saudi highways enabled thousands of trucks to ferry fertilizers and consumer goods across the Gulf through its Red Sea ports.
Still, economic growth has slowed in non-oil sectors. The International Monetary Fund in April lowered its projection for the kingdom’s expansion by 0.9 percentage points to 3.1% for 2026, though that reduction was the second lowest among the Gulf countries, trailing only Oman.
Senior US officials said Sunday that the US and Iran are closing in on a deal that would reopen the Strait of Hormuz, although President Donald Trump insisted he would not “rush” into an agreement.
Representatives for the Saudi government didn’t respond to a request for comment.
“For Saudi Arabia, each month of fighting costs about 1.5% of GDP in extra spending,” Ziad Daoud, chief emerging markets economist for Bloomberg Economics, wrote in May. “For most of its neighbors, the bill is probably higher.”
The UAE, the region’s second largest economy, is making investments of its own, setting up an alternative export hub on its east coast and accelerating construction of a pipeline to its Fujairah port on the Gulf of Oman to double crude export capacity. A spokesperson for the UAE pointed to comments from officials highlighting the pipeline expansion and efforts to bolster other areas like supply chains.
Nearby, Oman has launched a new trade corridor with the UAE’s emirate of Sharjah. Omani ports, which benefit from shipping through the Arabian Sea, have become increasingly important to the Gulf.
Meanwhile, Saudi Arabia is re-purposing parts of its Neom project in its northwest. A new strategy could entail an expanded logistics role for Neom, with its port being promoted as a hub used by European companies to access the UAE, Kuwait and Iraq, according to people familiar with the matter.
Neom has in recent years been scaling back its original plans to build a planned desert megacity.
Saudi Arabia’s $1 trillion wealth fund is also considering consolidating transport and supply-chain assets to create a logistics giant that can attract foreign investment.
“This war is accelerating Saudi Arabia’s plans to become a key logistics hub between Asia, Africa, and Europe, a title that has been indisputably held by Dubai’s Jebel Ali port for decades,” according to Albert Vidal Ribe, an analyst at the International Institute for Strategic Studies. Dubai’s Jebel Ali is among the largest container ports worldwide.
Saudi Arabia’s main equities index is now up about about 3% since the war started on Feb. 28, compared with drops of around 10% and 7% for Dubai and Abu Dhabi respectively.
That’s buoyed confidence among firms looking to list in the kingdom, and a number of companies are pressing on with preparations to go public in what has so far been a muted year for Gulf initial public offerings.
While Saudi Arabia has benefited from geography, it’s also prepared for decades for the possibility of Hormuz closing. The East-West pipeline was commissioned during the 1980s Iran-Iraq war, which saw attacks on ships in the strait.
Even those efforts may not be enough to counter all the regional threats that have been on show in recent years.
Accessing ports in the Red Sea isn’t without risk. Houthi militants in Yemen have carried out attacks that have plagued shipping in the area in recent years. The Houthis have avoided attacks on the Saudis during the Iran war.
Some of the traffic to the kingdom’s ports may last longer term because Iran will retain the ability to threaten transit through Hormuz, said Rudolph Lohmeyer, senior partner at the consultancy Kearney.
“This diversification away from the Strait of Hormuz is going to endure,” he said.
–With assistance from Anthony Di Paola.
Most Read from Bloomberg Businessweek
©2026 Bloomberg L.P.