Rystad Energy estimates a US$25 billion repair bill for Gulf energy infrastructure, amid large-scale military conflict in the region. “War in the Middle East has triggered severe global supply disruptions in oil and gas, with reported damage and shutdowns affecting LNG trains, refineries, fuel terminals and critical gas-to-liquids facilities across the region.”1
Iranian media reports that a gas pressure station and a pipeline near the Khorramshahr power plant were damaged by projectiles. Iran has targeted energy infrastructure in Gulf Arab states, including the Ras Tanura refinery in Saudi Arabia and the Fujairah oil terminal in the UAE. Traffic through the Strait of Hormuz – through which around 20% of the world’s oil flows – has been significantly curtailed. Even infrastructure designed to bypass the Strait, such as the Abu Dhabi Crude Oil Pipeline (ADCOP), is not immune to the wider risks posed by regional instability. Damage is widespread, with reports of up to 40 energy assets damaged across nine countries, causing massive revenue losses and global price spikes.
And yet, within this disruption, there are important contrasts. Saudi Aramco’s rapid restart at Ras Tanura (11 days after a 2 March drone attack caused a precautionary shutdown) highlights the often-overlooked advantage of domestic EPC capability: where local expertise and resources are readily available, recovery can be accelerated significantly. In contrast, projects dependent on constrained global supply chains or affected by sanctions face a much longer road to restoration. From LNG trains in Qatar, to refinery units in Bahrain, those countries with the ability to execute repairs (with the requisite access to specialist equipment, engineering capacity, and supply chains) win out. In some cases, particularly where specialist turbomachinery is required, lead times of several years mean that restoration timelines will extend far beyond initial repair efforts. This has important implications for pipeline and midstream infrastructure. While some assets across the region may return to service relatively quickly, others will remain offline for prolonged periods.
The immediate impacts of disruption in the Middle East are damaged assets, delayed production, and mounting repair costs. However, for the pipeline and wider energy infrastructure sector, longer-term consequences are likely to hang on less visible pressures.
Insurance and risk premiums are already emerging as a key constraint. Rising war-risk and marine insurance costs can quickly affect the viability of both shipping and project execution, hurting supply chains and inflating EPC pricing. At the same time, uncertainty around transit through the Strait of Hormuz is not only a concern for oil and LNG flows, but also for the movement of pipe, equipment, and specialist components.
Regional instability can delay mobilisation of skilled personnel, particularly for complex engineering work, slowing both repair efforts and ongoing developments.
The materials picture, for now, remains relatively stable. Signal Ocean notes that Gulf disruption has yet to significantly impact global steel flows, although trade is beginning to shift away from the region.2 Markets have so far absorbed disruption through inventories and delayed shipments. But steel production accounts for around 7 - 8% of global energy demand, so sustained increases in energy prices could squeeze margins and trigger output cuts in higher-cost regions such as Europe.
Overlaying all of this is the influence of energy markets: sustained price volatility hits consumers, and impacts directly on construction and operating costs, tightening pressure on project economics and timelines across the board.
