Gulf states invest in ‘Iran-proofing’: Bypassing Hormuz, buying arms

Key Points:

• Gulf states are rapidly implementing diverse infrastructure projects, including pipelines, railways, and ports, to reduce reliance on the Strait of Hormuz and mitigate the risk of Iranian disruptions to oil and gas exports.
• These initiatives, totaling around $290 billion, aim to divert up to 70-80% of Gulf exports away from the Strait of Hormuz by 2034, strengthening intra-Gulf cooperation and creating an economic model that excludes Iran.
• The closure of the Strait of Hormuz and Iranian attacks have triggered significant economic contraction forecasts for Gulf countries, with the IMF projecting sharp declines in regional growth and GDP for Qatar, UAE, and Saudi Arabia.
• Gulf states are also accelerating defense diversification through new arms deals, military partnerships, and development of indigenous missile and drone defense systems to counter future Iranian threats.
• While Gulf states still prefer coexistence with Iran, recent hostilities have led to a permanent shift toward self-reliance, economic decoupling, and a hardened security posture against Iranian leverage.