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The war in the Gulf is a reminder that globalisation still runs through very narrow places.
Attacks on commercial vessels, threats to energy infrastructure and military activity around the Strait of Hormuz have once again exposed how fragile the architecture of global trade really is. When instability touches this corridor, markets react immediately, energy prices jump, insurance premiums surge, and shipping routes shift. A stretch of water barely 32km wide at its narrowest point can send ripples through the entire world economy.
However, the significance of the current crisis extends beyond the disruption to tankers. It reveals a bigger change in how global trade works.
For three decades, the organising principle of globalisation was efficiency. Companies designed supply chains to minimise costs, exploit scale and take advantage of ever-deeper economic integration. Production moved wherever it was cheapest. Shipping lanes were treated as permanently open. Politics was assumed to sit safely in the background.
That assumption no longer holds. Trade has not collapsed. Goods still move. Consumers still buy. But the logic governing trade is changing. Governments and companies now consider resilience, security and political alignment, alongside efficiency. The cheapest supply chain is no longer automatically the best one.
The result is a world of selective integration. Countries still support trade, but they increasingly screen investment, impose export controls and subsidise domestic industries. Supply chains are becoming more regional and more political.
The rivalry between the US and China is accelerating this shift. Competition between the two global powers is reshaping technology partnerships, infrastructure investment and capital flows across regions.
For the Gulf, that rivalry creates both opportunity and constraint. On the one hand, as supply chains diversify, the Gulf’s geography becomes more valuable.
On the other hand, economic partnerships are increasingly tied to security concerns. Co-operation with China can bring capital and access to markets. Co-operation with the US increasingly comes bundled with security frameworks in sensitive sectors such as artificial intelligence, semiconductors and advanced computing. Recent technology agreements between Washington and Gulf states show how closely economics and national security have become intertwined.
Energy remains the foundation of the Gulf’s global economic role, but even those relationships are evolving. Buyers now seek partnerships that extend beyond oil to include transition fuels, renewable infrastructure and industrial decarbonisation. The energy transition is reshaping the nature of energy partnerships, even as Gulf producers remain strategically indispensable.
At the same time, new industries are opening paths for diversification. AI infrastructure, advanced manufacturing and critical minerals are rapidly becoming pillars of industrial policy worldwide. Gulf sovereign wealth funds are already investing in mining and resource projects abroad, while regional economies expand their capabilities in processing, logistics and strategic stockpiling.
These investments position the Gulf inside supply chains that are becoming more strategic – and more contested.
Geography, meanwhile, is becoming an asset again. In a fragmented trading system, companies seek locations that offer reliable ports, efficient customs systems, strong legal institutions and access to capital. In other words, they seek hubs capable of re-establishing global commerce.
The UAE has spent decades developing precisely that – ports, logistics zones and digital trade infrastructure designed to move goods and data efficiently. Saudi Arabia’s Vision 2030 strategy places logistics and connectivity at the centre of its economic ambitions.
As supply chains grow more complicated, those investments matter more. Trade agreements reinforce the strategy. The UAE’s Comprehensive Economic Partnership Agreements with countries across Asia, Africa and Europe aim to widen commercial ties beyond traditional markets. Lower regulatory barriers, stronger investor protections and deeper commercial links help position Gulf economies within emerging networks of manufacturing, services and digital trade.
For businesses operating in the region, geopolitics is no longer background noise. Sanctions, export controls and supply chain disruptions are now operational risks that must be planned for.
The crisis in the Strait of Hormuz underscores that global trade remains deeply tied to geopolitical stability. But it also highlights something else. In a world where commerce is increasingly shaped by strategy, as well as economics, the Gulf’s combination of geography, capital and policy ambition may make it more central to the global trading system than ever.
Marc L Busch is the Karl F Landegger professor of International business diplomacy at the Edmund A Walsh School of Foreign Service at Georgetown University
