The Gulf’s Expanding Role in the US-Israel War with Iran: Beyond Oil

Amid the ongoing US–Israeli war against Iran, much of the world’s attention has focused on the Strait of Hormuz, the narrow passage through which roughly a fifth of the world’s oil and liquefied natural gas passes. As of March 18, 2026, approximately 3,200 ships were stranded in the Gulf, with limited tanker passage permitted daily, disrupting vital trade routes and sending shockwaves through global markets. Though, the Gulf’s significance extends far beyond its role as an oil transit point. This region has evolved into a critical hub for the production and export of essential chemicals and materials that underpin global supply chains, making the consequences of the current conflict far-reaching and potentially catastrophic, particularly for the Global South.

The Strait of Hormuz: A Chokepoint Under Pressure

In normal times, ships traversing the Strait of Hormuz – situated between Oman and the United Arab Emirates on one side and Iran on the other – follow designated lanes for inbound and outbound traffic. Shortly after the onset of the war, Iran began attacking commercial vessels and laying mines in the waterway, effectively restricting marine traffic. The disruption briefly caused the international benchmark price for Brent crude oil to surge to nearly $120 a barrel on March 9, 2026, reaching its highest level since the Russian invasion of Ukraine [BBC News]. Donald Trump has called for Western allies to escort tankers through the Strait to stabilize prices, but has so far received no support [BBC News]. He has likewise threatened strikes on Iranian power plants if the waterway is not reopened [BBC News].

From Oil Spigot to Industrial Giant

The instinctive anxiety surrounding the Strait of Hormuz often stems from the memory of the 1973 oil embargo, when prices quadrupled and triggered recession and inflation. However, the Gulf region has undergone a significant structural transformation. While oil and gas remain crucial, Gulf nations are no longer simply producers and exporters of crude. Over the past decade, they have become diversified industrial giants, anchoring a vast system of production and trade that includes chemical plants, fertilizer complexes, shipping routes, and container ports.

The Rise of Petrochemicals and Global Supply Chains

This transformation has deeply integrated the Gulf into the global economy. Gulf-produced chemicals now sustain industries and food systems across continents. The region is a leading producer of polyethylene and polypropylene – plastic resins used in packaging, consumer goods, and industrial applications – accounting for more than 40 percent of global exports [CNN]. The Gulf also accounts for over a quarter of global methanol exports, 45 percent of sulphur exports, and between 30 and 40 percent of the global helium supply. These materials are essential for industries ranging from semiconductors to aerospace.

China’s Growing Dependence

The shift in the global economy has significantly impacted the Gulf. China’s emergence as a manufacturing powerhouse has driven increased energy consumption and a reorientation of Gulf exports towards East Asia. In 2000, China accounted for just 4 percent of global oil imports. today, that figure is around 25 percent, with over 40 percent of that coming from Iraq and the Gulf monarchies. China also imports nearly 20 percent of its liquefied natural gas (LNG) from the Gulf, primarily from Qatar. Iran supplies an additional 13 percent of China’s oil, often shipped through Malaysia to circumvent sanctions [Al Jazeera].

Fertilizers and Food Security

The Gulf’s role extends to the global food supply chain. Roughly half of the world’s population relies on food produced with nitrogen fertilizers, which require ammonia – a chemical primarily produced from natural gas. The Middle East accounts for nearly 28 percent of global ammonia exports, with Saudi Arabia being the world’s second-largest exporter. A significant portion of this ammonia goes to Morocco and India, both major fertilizer producers and importers. Disruptions to Gulf fertilizer supplies could lead to higher food prices and exacerbate food insecurity, particularly in import-dependent countries in the Global South [The Independent].

The UAE and Global Logistics

The UAE, particularly Dubai’s Port of Jebel Ali, serves as a crucial logistical hub for the Gulf’s industrial output and global trade. Jebel Ali is the largest harbor in the Middle East and one of the busiest container terminals globally, managed by DP World, a state-owned company controlling roughly 9 percent of the world’s container market. Approximately 60 percent of China’s trade with Europe and Africa passes through the UAE, solidifying the Gulf’s position as a commercial gateway connecting Asian manufacturing to the wider global economy.

Cascading Consequences

The current war could have cascading consequences, mirroring the 1970s oil crisis but with broader impacts. The Gulf’s deep integration into global supply chains means that disruptions in the region will ripple through industries and food systems worldwide, disproportionately affecting vulnerable populations in the Global South. The region’s historic position in the oil economy has transformed it into a hub for the industries and infrastructures that underpin modern capitalism, making its stability critical to the global economy.