Geopolitics

Beyond oil part II: How will Gulf reconstruction impact Asia? August 10, 2026 What’s new? With the US-Iran hostilities appearing to end, Asian CEOs are looking at the war’s impact in ways that go beyond the Strait of Hormuz and global trade disruptions.   Their comments reveal the surprising interconnectedness between Asian investments, Western firms and Middle East capital.   But, for the moment, the war has put these ties in a bind. A Western MNC supplier (and IMA member) shared that their Chinese and Indian clients have paused orders on Gulf construction projects. Short term, our business has seen a negative impact from the war. Indian and Chinese clients who were coming to us for projects in the Middle East are holding back on investments or delaying them. Practically speaking, it’s hard to start anything right now. On the other hand, private capital investors from the Middle East are also declining to finance some new investments in Asia. The Middle East has been one of the biggest investors into global private equity, private credit, and venture capital to a lesser extent, because they didn’t have as much need to invest at home. Gulf sovereign wealth funds and family offices have been substantial investors in global private markets. In the past two months, this significant source of capital has begun to dry up for new global projects. In recent years, the Gulf’s ‘pivot to Asia’ made it an increasingly valuable source of patient capital for large development projects. Gulf-Asia trade reached a record US$516 billion in 2024, while GCC sovereign wealth funds were directing billions in capital into Indian and Southeast Asian infrastructure, logistics, renewables, and digital assets. But perhaps India, and others, need to prepare for the possibility that this could change. We had a very large opportunity in India with a major private equity firm backed by Abu Dhabi sovereign wealth capital. They decided to sit this one out, suggesting that their investment dollars would be redirected toward opportunities closer to home. Their minimum check is in the category of a $100 million, so it is a significant amount of money that they are pulling out of global markets. Why it matters: Asian CEOs are preparing for what will happen the day after the war ends. They are not expecting a return to normal.   Two post-war themes emerged: The opportunity: What if Gulf domestic construction demand relies heavily on Asia-based suppliers? The constraint: What if Gulf capital becomes more competitive for Asian development projects in the future? The opportunity: With the Gulf states sustaining significant damage from Iranian missiles, the focus will soon shift to reconstruction, once it is safe to rebuild infrastructure.   While updated stats are hard to come by, it was widely reported that the Gulf Cooperation Council (GCC) countries are facing around $58 billion in repairs to energy infrastructure alone as of April. There will be more infrastructure spending than there would have been without the crisis. Refineries need repairs; new pipelines are being constructed; additional energy infrastructure will be needed; and new LNG terminals and ports will be required. There will be plenty of money to be made. A construction firm is already being asked to prepare for an onslaught of new projects by its Chinese and Indian clients. When the war does end, there is a massive amount of work to be done. Our customers in India and China are already asking us how many people we can deploy to the region on short notice. We expect billions and billions to be spent. Building resiliency will be the next step. Wealthy Gulf states whose economies stark dependency on regional stability will be looking to harden themselves against the next crisis. This will mean securing shipping lanes, energy exports, imported food, desalinated water, aviation hubs, and expatriate talent. The United Arab Emirates and Gulf states will be wondering, even though we are so rich and powerful, at any time our economy can be shut down by a neighbour. Their attitude will become much more like Singapore’s – staying friendly with everyone but seeking to be resilient in water, energy, data centres, and the like – just in case. The constraint: Gulf capital will likely become more selective and expensive for large-scale projects in Asia.   This could slow investment in energy and data centres needed to spur the AI transition. Capital will likely go first to the UAE. The dynamics of funding for private equity and credit markets are changing post-war. Capital pools are shifting, and many people do not yet understand this. What to watch next. Signs capital for Asian projects is tightening: Whether Gulf sovereign wealth funds formally increase domestic investment allocations. Whether large infrastructure and data centre projects in India and Southeast Asia experience financing delays. Whether Middle East reconstruction spending expands beyond damaged assets into broader resilience investments in energy, logistics, water, food security, and digital infrastructure. Whether Asian governments and private investors step in to fill any resulting funding gap. Signs that Asian firms and expertise are moving towards the Gulf more than usual, such as: Indian engineering firms are designing and managing projects. Indian, Filipino, and Southeast Asian migrant labour going out to build projects. Chinese firms are providing equipment, construction capability, solar infrastructure, telecoms, rail, and industrial equipment. Japanese and Korean firms are supplying advanced industrial systems. Western MNCs are providing specialised technology, automation, controls, software, safety systems, chemicals, and project management. Bottom line: Most commentary on the conflict is focused on oil markets and input shortages.   But if Gulf investors redirect money home, an unexpected longer-term impact may be a slowdown in much-needed investment in Asia. Meanwhile, for infrastructure suppliers, the Middle East could increasingly resemble what China was twenty years ago: a large-scale infrastructure and industrial transformation story. Deepen your understanding & explore the implications for business and strategy in our latest Asia Brief. Log In to access our latest reports. LOG IN Interested in joining the discussions?Contact us to learn more.

What Asia’s executives can do when a global shock scrambles supply and demand signals June 3, 2026 When the system looks fine… in a crisis: the Asia executives checklist   The new normal: Crises used to be relatively rare. Now they are almost as regular as the seasons. Since Covid-19, global trade has been disrupted by the Suez blockage, Russia’s invasion of Ukraine, the Red Sea crisis, Panama Canal restrictions, Trump’s Liberation Day tariffs, and the ongoing US-China controls. The Strait of Hormuz is the latest global shock facing Asia’s CEOs and executives. But, as the oil looks set to flow again, it is important to remember its lessons run wider than one waterway. A logistics executive set the tone. We live in a world that’s constantly volatile. The Strait of Hormuz is just one situation of many — the elephant in the room is that we could be in a super El Niño year. What surprises me is how little we still react. We forget very quickly that there was a blip, until suddenly there’s a problem again. We cannot let complacency set in. We have to stay energised and agile. (Logistics) Reading between the lines: Now that crises have become more common, a pattern has emerged. Early demand and supply signals tend to be predictably misleading. Often, the actions companies take to protect themselves mask and later amplify a broader downturn. Taking our cue from what senior executives in Singapore said about the Strait of Hormuz crisis, we extrapolated key lessons for next time. When the data on your desk is confusing, these could be the reasons why. 1. The all-clear is the first false signal In Q2, the numbers came in better than the forecasts. Several executives looked for the negative impact of the crisis but couldn’t find it. This morning, my COO and I were saying: everyone’s talking about this, but we can’t see it. Where is it? It’ll hit at some point — typically, it starts with the purchasing power of middle-class people or factory workers. Once it hits them, it hits us. (Industrial) All the forecasts we did at the very beginning were way too pessimistic. Even the status quo scenario — which is what’s actually happening — was too pessimistic. So are we the only industry where the actual numbers are surprisingly good? (Hospitality) 2. Scarcity distorts the orderbook – in both directions In industry, threats of scarcity and actual scarcity can scramble signals two ways – either with stockpiling or destocking. Fear of being caught short pulls buying forward and fills warehouses. This inflates prices. Then buyers with inventory vanish, running down the stock they hoarded instead of ordering more, so they can sell their goods at crisis prices. Neither move reflects real demand — one inflates it, the other hides it. A lot of the buying was because everyone wants to be sure they’re not the one left without raw material. There was a strong pull-forward. Or people said, ‘I’ve got reserves, let’s just use them and worry about it later’. They ran down the reserves much faster than we anticipated. We thought they had 30 or 60 days. Their attitude was ‘let’s make money while the sun is shining’. (Industrial research) The macro picture misled, too. The supply signals from China became scrambled when talk of export bans got falsely conflated with China stopping exports overall. We thought China had put in export bans. When in fact, they’re exporting to the world. Production wasn’t that impacted — they were running at full capacity. (Industrial research) 3. Factories stay open, but this obscures crippling shortages The largest factories rarely stop completely. A shutdown costs too much, so operators keep the lights on at minimum load by stretching out their inputs for as long as possible – making the business look healthier than it is. We’re not going full blast. We stretch it out because shutting down a big plant takes months to restart. So, you run it at 20–25% capacity, just to keep it open. Shutting down would be so expensive that you avoid it. (Chemicals) 4. Force majeure becomes a strategy Not every ‘we can’t supply you’ is about scarcity. Asia CEOs say much of it is strategic repositioning: firms are protecting margins or picking the customers who will matter most in the future. Now we really have to think about whom we sell to. We’re selling strategically. If someone has massive potential — a new industry, a new technology — you tell them you want to partner, and they get the allocation others won’t. (Chemicals) When supply is tight, the supplier holds the power and seeks to use it. Suppliers are in a nice position — they supply whoever offers the highest price. And now they can pick and choose. (Consumer goods) Buyers also use crises to their advantage. They don’t want to buy higher-cost feedstock just to fulfil contracts. They announced force majeure because they want to protect their own profits. It’s a perfect excuse. (Industrial research) 5. Consumers don’t flinch, but it’s just a matter of time Many households are still spending. But that comfort could be on borrowed time. The pain travels from industry to jobs to wallets, and it travels slowly. There’s a B2B impact going on, but the B2C impact isn’t evident yet. Everybody’s sitting on reserves — some say six weeks, some say six months, depending on the market. Eventually, what matters is the cost of living. (Financial) The holidays are locked in — the last thing a consumer delays is leisure. But corporate travel will hit us, as companies freeze travel and hiring. There’s a time lag. (Hospitality) The slow-burn risk is food – until crops are harvested, the extent of food shortages are hard to assess. A big impact comes next year on food inflation. Fertiliser supplies are very low, and we can miss the planting window. Food inflation hits the consumer more than anything — it’s your daily purchase.

War rooms and Safe havens April 21, 2026 Supply strains emerge: daily war rooms and tough trade-offs   What’s new: Asia CEOs are seeing the impact of the war in Iran on their supply chains, with tighter feedstock supplies, rising logistics costs, and longer lead times. The effects remain uneven across sectors and geographies, but early stress points are forcing uncomfortable decisions. Leaders are moving from strategic planning to triage, from price risk to availability risk. There’s a war room every day with my leadership team to make decisions on everything from rerouting supplies to raising prices with customers. Never a dull moment.’ (science-based service provider) Supply chain resiliency is the key question in this very uncertain world. This is my biggest concern right now, which is keeping me up at night. (global manufacturer with assembly in the US) Here’s what Asia CEOs and managers are saying. Feedstock gaps are emerging, sometimes in unexpected places. Customers are cutting operations because they are running out of feedstock. Packaging suppliers sent us force majeure letters because the petroleum-derived raw materials, or resin feedstocks, are not reaching the region. We have a vast supply chain network with redundancy capability, but packaging is not viable if it must be air freighted. Air cargo prices are through the roof. In a few weeks, we could run out of some plastic jug SKUs. We are having to increase prices. Inflation hit us hard on transportation costs, and now it’s impacting raw materials. We are in crisis mode. Scarcity is forcing tough trade-offs on the factory floor and with customers. In chemicals and plastics, the past month has been chaotic. Energy prices matter, but the bigger issue is feedstocks. Crude and gas are refined into inputs for chemicals and plastics. Across the region, supply is disrupted. Key inputs like naphtha and LPG are in short supply. Producers in Korea, Japan, and Taiwan are scrambling — deciding how hard to run plants, how long inventory will last, and prioritising customers who can pay higher prices. Planning has become extremely difficult. Running plants too low is inefficient and costly; running them too high, burns through feedstock too fast. Both carry risks, including equipment damage. So, it’s constant trade-offs, every day. Energy exposure varies significantly by country and needs to be assessed… We are going country by country to understand how much energy is coming from the Middle East or elsewhere. Our team has been doing a deep dive to educate ourselves. Our Vietnam country head said energy costs rose by 50% in February due to energy shortages. Hydro and coal are the main energy sources; gas accounts for only 10%. While Malaysia is more stable. High fuel costs limit the mobility of employees and goods. So many Asian countries are energy dependent and people can’t afford the high prices. This makes it hard for employees in outsourced business functions, such as HR or finance, to get to work when fuel costs are so high. In Sri Lanka, companies are letting employees work from home or arranging busing to get them to the office. We are absorbing material costs for now, but logistics costs have gone through the roof. At the end of the day, we must deliver the P&L. We are discussing price increases with customers. Air freight has become an expensive stopgap for some. I advise a British company with a large factory in Dubai that supplies India and parts of the Middle East. We are using air freight from the UK to keep supplying our Indian customers while Middle East sales are down by 50%. But thankfully, customers in the Gulf are still discussing future orders, so there is still a pipeline. China’s energy mix offers a temporary buffer. We have huge supply chain issues in India. Our powder-coat facilities require large amounts of gas to bake the paint. We are considering temporarily switching production back to China to avoid disrupting the customer experience, but this will have significant import tax implications. We are eating all the costs for now, but I don’t know how long we can do that for. Coal-based chemical production has kept running in China…despite the push towards renewables. Energy is where China stands out. There was a lot of talk about China moving away from coal toward solar, wind, and hydrogen. But in the chemical industry, China maintained coal-based production. Coal prices have barely moved, and coal-to-chemicals is running very well. China’s oil demand was expected to decline as EVs and renewables grew, yet it continued to stockpile oil. Looking back, their strategy is vindicated. What’s next: keeping an eye on other vital maritime chokepoints. Members raised concerns about the Taiwan Strait, the Panama Canal, and the Suez Canal. Panama has taken steps affecting CK Hutchison’s port concessions, further straining relations with China. While in Egypt, China has invested substantially in the Suez Canal. Ships are avoiding the Suez Canal because of higher insurance premiums and other risks. They are going around the southern tip of Africa, causing delays of 10 to 18 days for shipments to Southeast Asia coming from Europe and the US East Coast. We are also aware of the strategic presence of Chinese investment in that part of the world and in the Panama Canal, which creates some uncertainty. Bottom line: The Strait of Hormuz disruption is still working its way through the system, and the impact is uneven. But as buffers erode, more sectors are likely to face the same trade-offs caused by price volatility and availability risk. Silver Linings and Safe Havens   What’s new: Cancelled flights to the Middle East (and more recently China), along with rising fuel costs, are disrupting long-haul travel and compressing airline margins.   On the ground, however, more than one Asia CEO shared their experiences of packed regional hubs. There are media reports that taxis stopped running to the Bangkok airport because of fuel prices but that seems overstated. I was just in Bangkok, the airport was jam-packed, same as

Beyond oil: the blocked Gulf inputs that hurt Asia the most April 14, 2026 Since the Strait of Hormuz closed, oil and LNG prices have dominated the headlines. But as the war continues, the story that will define the next six to twelve months is the rising prices of everything else stuck in the Gulf. The Asia Bulletin reflects insights from IMA’s peer forums for CEOs and senior leaders. It highlights anonymised perspectives that surface the issues executives are grappling with firsthand. Reach out to us if you’re interested in the full report. It turns out that the Strait is a critical chokepoint for far more than oil.   For example, the Gulf is a major supplier of fertiliser inputs (e.g., urea) and helium to Asia. As these become scarcer, the prices of food and semiconductor chips will skyrocket. In late March, IMA Asia invited Nenad Pacek, founder of the EMEA Business Group and a 35-year veteran of Middle East business intelligence, to share his expertise with our members. The second-order supply shocks building behind the scenes were discussed. Even if the Strait were to reopen in the coming days or weeks, stockpiles of critical inputs are rapidly depleting, and damaged production sites across the Gulf will take time to repair. The impact across Asia will vary by industry and degree of dependence, but long-tail inflationary effects are to be expected. There appears to be no quick fix. Even in the base case of the war ending in the next month or so, Pacek advised: The clearance of the logjam and backlogs will take a while… our shipping clients believe this could linger into late Q2 or later. Below is a sample of the shortages to watch out for, along with a checklist to help Asia CEOs take action. The chips and electronics industries face helium and bromine shortages Helium is a big ingredient for the semiconductor industry. About 30% of the global supply comes from the region, mainly Qatar. Now it’s completely disrupted as well. Helium: Operations at QatarEnergy’s Ras Laffan Industrial City, the world’s largest LNG export facility, which produces helium as a byproduct, were halted after it was struck by an Iranian drone early in the war. Iranian missiles subsequently crippled the plant further. Spot helium prices have since doubled. For Asia’s chipmakers, the exposure is acute as stockpiles deplete. South Korea and Taiwan source more than 60% of their helium from Qatar, leaving them highly exposed. Japan has a more diversified supply base, sourcing only 30% of its helium from the Gulf. Bromine: used in precision chip etching and as a flame retardant in circuit boards, is also putting Korea’s electronics industry at risk. It is a quiet chokepoint that gets little media coverage but has a high concentration risk. Around two-thirds of the world’s bromine production comes from Israel and Jordan (from the Dead Sea), but Korea relies on Israel for most of its supply. The food and ag industries face fertiliser shortages (lacking inputs like urea, sulphur, etc.) as the planting season looms About 35% of the world’s fertiliser imports come from the Gulf. And about a third of the world’s urea passes through the Strait of Hormuz. The price of fertiliser has skyrocketed as shortages mount. The timing could not be worse for countries like India, with planting season on the way. India has an 800,000-ton deficit in its monthly urea production of 2.6 million tons due to limiting industrial gas supply to the 70–75% range. Furthermore, disruptions to ammonia imports have brought local production to a standstill, as the country sources 80% of its ammonia needs from the Gulf region. India is turning to Chinafor assistance. Australiaexpects current stocks to run out by mid-April, as it sources over 60% of its urea from the Middle East. A domino effect… Strait closure leads to shortages of urea and sulphur, which in turn cause shortages of nitrogen and phosphate fertilisers. Down the road, this could lead to lower crop yields, food price inflation, and potentially political instability. …on time delay. Experts expect inflation to spike mid- to late Q2 if the war extends. Food inflation will lag behind fertiliser price rises by three to six months, meaning H2 2026 is the key window to watch for food price cascades in Asia. Manufacturers face shortages in petrochemicals and aluminium A lot of the world’s supply chains — whether it’s the car industry, heavy industry, or plastics — depend on critical petrochemical components from the Gulf. And a lot of that is just simply not leaving. Petrochemical shortages are the hardest to quantify but could potentially result in the broadest shock. The Gulf’s SABIC, BOROUGE, QAPCO, and affiliates produce ethylene, propylene, polyethylene, methanol, and hundreds of downstream derivatives used globally in electronics, packaging, automotive, and pharma applications. For aluminium, it goes beyond logistics headaches. Iran has targeted the region’s major aluminium plants with missiles and drones. Kuwait, Qatar, and Bahrain are all stuck. All the aluminium exports from Bahrain are stuck, which has a global impact on top of everything else. The Middle East supplies 9% of the world’s aluminium, and Bahrain accounts for 3%. Aluminium prices hit a four-year high in March, with some suggesting they could reach $4,000 per ton if the industry faces severe disruption. One caveat: Chinese-invested aluminium plants in Indonesia are expected to ramp up production this year. A global logistics logjam — ships and containers stuck in the Gulf Ships and containers unable to offload their cargo remain in the Gulf, tying up shipping capacity needed elsewhere and driving prices higher. Hundreds of thousands of containers —up to 2 million TEU of cargo once downstream disruption is considered — are caught in the Gulf. That’s a global shipping disruption because those containers cannot be in Asian ports, the Port of Los Angeles or Rotterdam. So it’s already significantly increasing global shipping costs. The routing problem is not easily fixed – there are few port alternatives to the Strait in