MARKET INSIGHT | MIDDLE EAST
MENA – Industrial construction project Projected spending value by stage ($M) Pre-planning Planning Pre-execution Execution Construction complete
2024
2025
2026
2027
2028
2029 Note: Based on assumption that all projects proceed as planned and that spending is evenly distributed during the construction phase.
2030
rely heavily on imported energy, sustained increases in oil and gas prices are likely to feed quickly into broader construction cost inflation. The industry also faces growing pressure
from disruptions to key industrial inputs. The Middle East is a major supplier of metals and petrochemicals used throughout construction supply chains. Aluminum Bahrain (Alba), for example, has begun a phased shutdown of its smelting operations after supply constraints linked to the Strait of Hormuz disrupting access to alumina feedstock. Qatar has also curtailed some aluminium production due to natural gas shortages. As a result, aluminium prices on the London Metal Exchange have climbed to their highest levels since 2022. Petrochemical-derived products – including
PVC, insulation foams, piping, sealants and synthetic construction components – are also expected to become more expensive as
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feedstock costs rise. For contractors operating under fixed-price contracts, sudden increases in input costs can quickly erode margins. In some cases, projects may be delayed while budgets are reassessed; if price pressures persist, some developments could be scaled back or cancelled altogether. That said, the broader economic fallout may
remain relatively contained if the conflict does not intensify further. Goldman Sachs expects the main global impact to be concentrated in higher energy prices rather than a broader collapse in trade. Non-energy trade with the Gulf accounts for only around 1% of global commerce. In some markets, domestic sourcing also provides a degree of insulation. In the UK, for example, the Construction Products Association estimates that around 75% of construction products are sourced domestically, limiting direct exposure to import disruption.
Shipping disruption and supply- chain pressures Beyond energy markets, the conflict is also disrupting global maritime logistics. Shipping through the Strait of Hormuz has effectively halted, restricting access to key regional hubs such as Dubai’s Jebel Ali, the busiest container port outside East Asia. This has significant implications for construction supply chains, given the industry’s dependence on internationally traded materials and equipment. Materials such as structural steel, aluminium
products, heavy machinery and mechanical systems are particularly exposed. In many cases, vessels are being rerouted around the Cape of Good Hope, extending transit times by between two and nearly three weeks. These longer routes are also driving up freight costs. Container shipping rates have already
begun to respond. According to the Drewry World Container Index, the spot rate for a
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