For years, multinational companies operated in the Middle East with the belief that while politics could flare up, trade would largely continue. That assumption, while once reasonable, is now under serious strain. The war between Israel and Iran leaves companies facing the prospect of major operational disruption.
Political instability in the Middle East is not new. From the Iran-Iraq Tanker War in the 1980s to the 1990 Gulf War, the region has experienced repeated shocks. Yet despite these disruptions, commercial flows (particularly energy) have largely continued. That continuity is now threatened.
As long-time adversaries Israel and Iran exchange air strikes and retaliations, and the US repositions naval assets to the region, companies doing business in the Middle East are confronting a hard truth: supply chains are not protected from conflict; they are increasingly shaped by it.
What's the impact?
The war poses serious operational risks – not only for companies with direct exposure in the Middle East, but also for global firms reliant on the region’s shipping corridors.
Vital routes through the Strait of Hormuz and major regional ports such as Jebel Ali, Sohar and Fujairah serve as critical nodes in global supply chains, handling oil, liquefied natural gas, container freight, auto parts and electronics bound for markets across Asia and Europe.
Disruptions in the Gulf ripple outward, driving up freight costs, delaying shipments and straining inventory systems around the globe. Energy, manufacturing and logistics firms, even those with their headquarters in Europe, Asia or North America, remain tightly bound to these flows.
A case in point is the Strait of Hormuz, the narrow waterway that links the Gulf to the Arabian Sea. About one fifth of the world’s oil passes through this chokepoint. It also functions as a vital artery for container traffic in and out of Dubai’s Jebel Ali port.
Since the war started, insurance premiums for ships passing through the strait have jumped more than 60 per cent, reflecting fears of missile attacks and electronic interference. Freight rates for large crude carriers from the Gulf to China have more than doubled.
Many shipping firms, including Maersk and Hapag-Lloyd, began diverting vessels around Africa’s Cape of Good Hope months ago to avoid attacks from Houthi rebels in the Red Sea. These detours have already introduced delays and higher fuel costs.
The Israel-Iran conflict has expanded the threat zone into the Gulf and eastern Mediterranean, prompting some tanker companies like Frontline to refuse new contracts through Hormuz.
What can companies do?
The first step in response is clear-eyed stress testing. Too often, this takes the form of box-ticking exercises. But in the current environment, firms must go deeper.
An effective stress test maps all critical inputs – logistics routes, suppliers, warehousing nodes – and then runs real scenarios: What if the northern Israeli port city Haifa is offline for two weeks? What if Hormuz is blocked for five days? Overflight permissions above Israel, Iran and nearby airspace have already been revoked or restricted, forcing carriers to reroute flights and suspend operations. The operational cost is no longer hypothetical.
The goal isn’t to predict the future, but to prepare for plausible disruptions. Each scenario requires firms to estimate recovery time, switching costs and the impact on customers.
Where backup options don’t already exist – alternative ports, substitute suppliers or inland storage – they must be established before disruption forces a reaction. The urgency is particularly acute for exporters racing to shift goods ahead of the US administration’s “liberation day” tariff hikes – most visibly seen in the surge in container bookings between Asia and the US.
When companies front-load goods, disruptions in major shipping lanes suddenly become a major vulnerability. Even a small delay in a critical route like the Gulf, Red Sea or Hormuz can disrupt timed inventory strategies, sharply increase costs, and risk stock-outs.
Another pressure point is insurance. Coverage for assets, cargo and personnel in the Gulf is being rapidly repriced, as war-risk premiums on tankers soar. Boards must reassess their financial shields. Which facilities and transit corridors are still insurable? Are policies clear on what constitutes a conflict zone? Is coverage structured to remain valid amid escalation?
In this environment, firms with deep local networks are better placed to cope with uncertainty. Local partners offer more than market access – they provide intelligence, continuity and leverage.
When international trade routes are under stress, it is local agents who know which port remains operational, which corridors are open and which ministries are accessible. In a crisis, corporate headquarters are often the last to know. Local partners are often the first.
This does not mark a full withdrawal from the region. The Middle East remains central to global energy and shipping flows. But it does signal a recalibration – away from blanket engagement and towards more selective, risk-adjusted exposure.
Companies with assets near active conflict zones are likely to reallocate rather than withdraw, shifting operations towards more stable Gulf states such as the UAE or Oman. As a result, regional supply chains are being quietly restructured, not for speed or cost, but for resilience. This shift was already in motion. The latest escalation will only accelerate it.
For corporate boards, the question is no longer whether to act, but how fast. That starts with diversifying suppliers and routes to avoid over-reliance on any single area. It also means identifying which products and markets matter most, and protecting those first.
Carlos Cordon is IMD professor of strategy and supply chain
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
UAE currency: the story behind the money in your pockets
Company profile
Name: GiftBag.ae
Based: Dubai
Founded: 2011
Number of employees: 4
Sector: E-commerce
Funding: Self-funded to date
More from Rashmee Roshan Lall
Skoda Superb Specs
Engine: 2-litre TSI petrol
Power: 190hp
Torque: 320Nm
Price: From Dh147,000
Available: Now
BRAZIL%20SQUAD
%3Cp%3EGoalkeepers%3A%20Alisson%2C%20Ederson%2C%20Weverton%3Cbr%3E%3Cbr%3EDefenders%3A%20Dani%20Alves%2C%20Marquinhos%2C%20Thiago%20Silva%2C%20Eder%20Militao%20%2C%20Danilo%2C%20Alex%20Sandro%2C%20Alex%20Telles%2C%20Bremer.%3Cbr%3E%3Cbr%3EMidfielders%3A%20Casemiro%2C%20Fred%2C%20Fabinho%2C%20Bruno%20Guimaraes%2C%20Lucas%20Paqueta%2C%20Everton%20Ribeiro.%3Cbr%3E%3Cbr%3EForwards%3A%20Neymar%2C%20Vinicius%20Junior%2C%20Richarlison%2C%20Raphinha%2C%20Antony%2C%20Gabriel%20Jesus%2C%20Gabriel%20Martinelli%2C%20Pedro%2C%20Rodrygo%3C%2Fp%3E%0A
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Name: Peter Dicce
Title: Assistant dean of students and director of athletics
Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
THE BIO
Family: I have three siblings, one older brother (age 25) and two younger sisters, 20 and 13
Favourite book: Asking for my favourite book has to be one of the hardest questions. However a current favourite would be Sidewalk by Mitchell Duneier
Favourite place to travel to: Any walkable city. I also love nature and wildlife
What do you love eating or cooking: I’m constantly in the kitchen. Ever since I changed the way I eat I enjoy choosing and creating what goes into my body. However, nothing can top home cooked food from my parents.
Favorite place to go in the UAE: A quiet beach.
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
Key products and UAE prices
iPhone XS
With a 5.8-inch screen, it will be an advance version of the iPhone X. It will be dual sim and comes with better battery life, a faster processor and better camera. A new gold colour will be available.
Price: Dh4,229
iPhone XS Max
It is expected to be a grander version of the iPhone X with a 6.5-inch screen; an inch bigger than the screen of the iPhone 8 Plus.
Price: Dh4,649
iPhone XR
A low-cost version of the iPhone X with a 6.1-inch screen, it is expected to attract mass attention. According to industry experts, it is likely to have aluminium edges instead of stainless steel.
Price: Dh3,179
Apple Watch Series 4
More comprehensive health device with edge-to-edge displays that are more than 30 per cent bigger than displays on current models.
UAE currency: the story behind the money in your pockets
Haircare resolutions 2021
From Beirut and Amman to London and now Dubai, hairstylist George Massoud has seen the same mistakes made by customers all over the world. In the chair or at-home hair care, here are the resolutions he wishes his customers would make for the year ahead.
1. 'I will seek consultation from professionals'
You may know what you want, but are you sure it’s going to suit you? Haircare professionals can tell you what will work best with your skin tone, hair texture and lifestyle.
2. 'I will tell my hairdresser when I’m not happy'
Massoud says it’s better to offer constructive criticism to work on in the future. Your hairdresser will learn, and you may discover how to communicate exactly what you want more effectively the next time.
3. ‘I will treat my hair better out of the chair’
Damage control is a big part of most hairstylists’ work right now, but it can be avoided. Steer clear of over-colouring at home, try and pursue one hair brand at a time and never, ever use a straightener on still drying hair, pleads Massoud.
More coverage from the Future Forum
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
Fresh faces in UAE side
Khalifa Mubarak (24) An accomplished centre-back, the Al Nasr defender’s progress has been hampered in the past by injury. With not many options in central defence, he would bolster what can be a problem area.
Ali Salmeen (22) Has been superb at the heart of Al Wasl’s midfield these past two seasons, with the Dubai club flourishing under manager Rodolfo Arrubarrena. Would add workrate and composure to the centre of the park.
Mohammed Jamal (23) Enjoyed a stellar 2016/17 Arabian Gulf League campaign, proving integral to Al Jazira as the capital club sealed the championship for only a second time. A tenacious and disciplined central midfielder.
Khalfan Mubarak (22) One of the most exciting players in the UAE, the Al Jazira playmaker has been likened in style to Omar Abdulrahman. Has minimal international experience already, but there should be much more to come.
Jassim Yaqoub (20) Another incredibly exciting prospect, the Al Nasr winger is becoming a regular contributor at club level. Pacey, direct and with an eye for goal, he would provide the team’s attack an extra dimension.
more from Janine di Giovanni
Dengue%20fever%20symptoms
%3Cul%3E%0A%3Cli%3EHigh%20fever%3C%2Fli%3E%0A%3Cli%3EIntense%20pain%20behind%20your%20eyes%3C%2Fli%3E%0A%3Cli%3ESevere%20headache%3C%2Fli%3E%0A%3Cli%3EMuscle%20and%20joint%20pains%3C%2Fli%3E%0A%3Cli%3ENausea%3C%2Fli%3E%0A%3Cli%3EVomiting%3C%2Fli%3E%0A%3Cli%3ESwollen%20glands%3C%2Fli%3E%0A%3Cli%3ERash%3C%2Fli%3E%0A%3C%2Ful%3E%0A%3Cp%3EIf%20symptoms%20occur%2C%20they%20usually%20last%20for%20two-seven%20days%3C%2Fp%3E%0A
COMPANY%20PROFILE%20
%3Cp%3EName%3A%20DarDoc%3Cbr%3EBased%3A%20Abu%20Dhabi%3Cbr%3EFounders%3A%20Samer%20Masri%2C%20Keswin%20Suresh%3Cbr%3ESector%3A%20HealthTech%3Cbr%3ETotal%20funding%3A%20%24800%2C000%3Cbr%3EInvestors%3A%20Flat6Labs%2C%20angel%20investors%20%2B%20Incubated%20by%20Hub71%2C%20Abu%20Dhabi's%20Department%20of%20Health%3Cbr%3ENumber%20of%20employees%3A%2010%3C%2Fp%3E%0A
UAE currency: the story behind the money in your pockets
The Vile
Starring: Bdoor Mohammad, Jasem Alkharraz, Iman Tarik, Sarah Taibah
Director: Majid Al Ansari
Rating: 4/5
MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
MATCH INFO
What: 2006 World Cup quarter-final
When: July 1
Where: Gelsenkirchen Stadium, Gelsenkirchen, Germany
Result:
England 0 Portugal 0
(Portugal win 3-1 on penalties)
