THE PERSIAN GULF: A REGION WITH HIGH GEOSTRATEGIC STAKES.

The Persian Gulf holds vast oil and gas reserves. These resources are supplied globally. To ensure that, tankers and liquified natural gas (LNG) carriers must cross the Strait of Hormuz. It is said to be the world’s most important chokepoint. The region is continuously under geopolitical tensions. Along these tensions are environmental challenges that must be dealt with now to ensure long-term prosperity and survival.

Let’s take a closer look at the region.

Strategic importance for natural resources supply and global trade

Gulf States hold about 60% of the world’s oil reserves and 40% of gas reserves. They produce about 33% of world’s oil and 17% of its gas.

Estimated percentages of the global reserves per country (Source: EIA and BP).

The Persian Gulf is also a key area for global shipping. About 30,000 commercial ships per year cross the Strait of Hormuz. The shipping loads include:

• Crude oil,

• LNG,

• Refined products,

• Petrochemicals,

• Containers,

• Metals,

• Agricultural products,

• Electronics.

Challenges

Security challenges

The region has often faced conflicts and tensions. There were the Gulf wars, wars on terrorism, and a long rivalry between Iran and Saudi Arabia. China helped settle diplomatic relations in 2023. Once again, the Gulf is in the spotlight with the Iranian nuclear program, the ongoing war with Israel and U.S. strikes.

One spot is very sensitive: the Strait of Hormuz. This narrow waterway (45km) links the Persian Gulf to the Gulf of Oman, opening to the Indian Ocean. At its narrowest point, the two shipping lanes are only 3km wide each. Despite its tightness, the strait is a critical chokepoint as about 20% of global oil and 1/3 of LNG passes through each day.

Many countries depend on the strait. Gulf oil is 75% of China’s oil supply. About 60% of its exports to Europe and Africa pass through Dubai’s port. The European Union also counts on oil and gas supplies from the Persian Gulf, especially since the boycott of Russian’s resources.

To avoid the strait, Saudi Arabia built a pipeline to the Red Sea that can carry 5 million barrels per day. The U.A.E. did the same towards the harbor in Fujairah on the Golf of Oman. It can carry 1.5 million barrels per day.

Indeed, Iran often used the strait as a strategic leverage and threatened to close it. If it did, the barrel could hit over 100$ and the vessels would have to take longer routes. Also, if Iran attacked or seized vessels like it has in the past, shipping companies might not want to work in Gulf terminals. This would drive freight rates up. This is already an ongoing issue in the Red Sea with the Houthis’ threats on the Strait of Bab El-Mandeb.  

As a response to this instability, Western countries deployed their military in the region. The United States has a high presence in the region, including its V^th Fleet’s HQ in Bahrein. France also has a naval base in Abu Dhabi and the U.K. has one in Bahrain.

Two naval missions act in the region to ensure trade security:

Economic and environmental challenges

Most Gulf States gained their wealth by exploiting their soil. But these resources are not unlimited and the need to diversify revenues is growing. To this extent, several projects were launched in the region:

• Vision 2030 (Saudi Arabia),

• Net Zero by 2050 (United Arab Emirates),

• National Vision 2030 (Qatar).

The goal is to use oil money to invest on long-term projects that will provide continued growth and development. These projects include:

• Green energy (solar, hydrogen, civilian nuclear),

• Green technologies,

• Sovereign funds.

This shift from oil and gas to ecology is also led by environmental stakes.

There is already a lack of topsoil in the region. On top of that, there is a growing desertification and water stress. These are mostly due to higher temperatures, low rainfalls, high water demand and urbanization. This causes:

• Heavy use of desalination and extreme consumption of fossil groundwater,

• Rising water costs,

• Increasing energy use for desalination,

• Import-dependance for food,

• More frequent and intense dust storms (affecting air quality and health),

• Damage to nature and wildlife.

Indeed, rising temperatures in the region are worrying. They could reach 60°C in the next thirty years. Combined with the factors above, the Gulf could become too hot to live in by 2070. Acting now is vital for sustainability, food security and stability in the region.

Decoding geopolitics isn’t a job. It’s survival.

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