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There is nowhere else on the planet with quite as concentrated a supply of quite so much energy as the Arabian Gulf.
This is the great paradox that has both haunted and supported this region for decades; it is part of the reason why so many nations around the world remain so interested in what’s happening there – and it is the main reason why war in the Gulf is so threatening for global growth.
It is tempting, given this is 2026 and not 1976, to assume oil prices simply don’t matter anymore. And it’s certainly true that the direct contribution of oil to global gross domestic product is significantly lower today than it was 50 years ago. However, disruption to the hydrocarbon supply coming from the Gulf still has outsize importance today, for two reasons.
Markets latest: Key developments as war grips Middle East
The first is that we’re not just talking about oil. We’re talking about fertilisers (derived from natural gas). We’re talking about plastics (from the many petrochemicals produced from gas and oil). We’re talking about the composite materials used to make the fuselages in the latest passenger jets and Formula One cars. All begin as oil and gas pumped out from under the ground. And there is no greater store of those hydrocarbons anywhere else on the planet than here.
That is point number one. Point number two is that the majority of those hydrocarbons have to exit the Gulf through a single, narrow maritime corridor known as the Strait of Hormuz. And since this strait is bordered on the north by Iran, that raises significant questions about how easily we can procure these essential ingredients for human civilisation in future.
Point number three is that there’s also a big question mark about whether we’ll be able to get it out of the ground in the first place. The single most market-moving event…
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