MIDDLE EAST | MARKET INSIGHT MENA – Industrial construction product pipeline Value by stage ($M)
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Conflict threatens to derail construction recovery The escalation of military conflict in Iran and across the Middle East in March 2026 has delivered a major geopolitical shock to global markets, disrupting commodity prices, shipping routes and supply chains. While construction is not directly tied to military activity in the region, it is highly exposed to changes in energy costs, supply-chain reliability and raw material markets. As a result, the conflict is heightening concerns about a renewed wave of construction cost inflation, reducing expectations for near-term central bank rate cuts and creating additional challenges for contractors worldwide. Construction markets in advanced economies had already entered 2026 in a weakened position. GlobalData forecasts flat construction output growth across OECD markets this year, following a decline in 2025. In the UK, the Office for National Statistics reported that seasonally adjusted construction
output fell quarter on quarter in Q4 2025. In the US, data from the Bureau of Labor Statistics indicate that labour market conditions are softening, with the construction sector recording net job losses in February 2026. Against this backdrop, the prospect of renewed cost-push inflation and slower economic growth could create further headwinds for the industry over the forecast period.
Market disruptions The most immediate impact on the construction industry will come through volatility in global energy markets, driven by ongoing disruption around the Strait of Hormuz. This strategic waterway, now effectively closed to most international shipping, links the Arabian Gulf to global trade routes and remains one of the world’s most important energy chokepoints. According to the US Energy Information Administration, approximately 20–21 million barrels of crude oil and petroleum liquids pass through the
strait each day – around one-fifth of global seaborne oil trade – as well as roughly 20% of global liquefied natural gas shipments. Heightened security risks and shipping disruptions have pushed oil prices sharply higher, with crude rising above $102 per barrel after increasing by around 40% since the conflict began. In response, the International Energy Agency has coordinated the release of 400 million barrels from emergency reserves, the largest such intervention in its history. At the same time, the closure of the strait and limited storage capacity have forced major producers, including Saudi Arabia, the UAE and Iraq, to reduce output.
For construction, higher energy prices
have direct consequences. Energy intensive materials such as steel, cement, bricks, asphalt and bitumen are especially vulnerable to rising production costs. Elevated fuel prices also increase the cost of transporting materials, operating diesel-powered machinery, and managing site logistics. In markets that
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MENA – Industrial construction product pipeline Value by stage and country ($M) Egypt
Saudi Arabia Morocco Oman UAE
Algeria Iran
Jordan Iraq
Libya 0 50,000 100,000 150,000 Pre-planning Planning Pre-execution Execution
www.hoistmagazine.com | May/June 2026 | 37 200,000
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