The ongoing Middle East conflict is increasingly becoming a major threat to global construction and infrastructure projects, with rising material costs, shipping disruptions, labour shortages, insurance risks, and energy price spikes beginning to affect projects across several countries. Industry experts and risk analysts warn that prolonged instability around the Strait of Hormuz could create long-term disruption for infrastructure development worldwide.
According to global risk advisory firm Marsh, the conflict has created “acute volatility” for businesses operating in the Middle East and beyond, particularly in sectors heavily dependent on logistics, fuel supply, and global trade routes. The company said geopolitical tensions are now creating operational, financial, and insurance-related risks for infrastructure and construction projects across the region.
Analysts say the partial disruption of the Strait of Hormuz — one of the world’s most critical shipping routes — has sharply increased transportation costs for essential construction materials such as steel, cement, aluminium, copper, glass, PVC, and fuel-intensive products. Since nearly 20% of global seaborne oil trade passes through the Strait, any prolonged disruption is expected to raise inflation and delay infrastructure projects globally.
Construction consultancy firms have already started revising forecasts due to the conflict. Mace Consult recently increased its tender price forecasts for 2026 after warning that higher oil and gas prices could significantly impact construction costs and business confidence. The company stated that energy-intensive materials and transport expenses are likely to become more expensive if instability continues.
The crisis is also creating severe supply chain uncertainty. According to Linesight, disruptions linked to the Middle East conflict are now affecting global supply chains faster than originally expected, particularly in metals and energy markets. Experts warn that shortages in aluminium, copper, and battery materials could delay major infrastructure and renewable energy projects worldwide.
Energy infrastructure damage has become another major concern. Research firm Rystad Energy estimated that the Middle East conflict could leave the region facing up to $58 billion in repair costs for damaged oil, gas, industrial, and desalination infrastructure. Analysts warned that rebuilding damaged facilities will consume engineering capacity, labour, and equipment that would otherwise support new global projects.
The Gulf region’s ambitious megaprojects are also under pressure. Countries such as Saudi Arabia, the UAE, and Qatar had been investing heavily in tourism, smart cities, logistics hubs, renewable energy, and post-oil economic diversification projects. However, reports suggest investor confidence, tourism activity, and infrastructure expansion plans are now slowing because of geopolitical uncertainty and security concerns.
Insurance and financial risks are rising as well. Marsh and other risk analysts have warned that terrorism insurance premiums, political risk coverage, and contractor liability concerns are becoming increasingly complex in conflict-affected zones. Companies operating in the Middle East are now reassessing workforce safety, project continuity planning, and financial exposure linked to geopolitical instability.
Banking and financing risks are also growing. S&P Global Ratings recently warned that Gulf banks could face significant deposit outflows if the conflict worsens, potentially affecting infrastructure financing and investment flows across the region.
Industry experts say that if the conflict continues for several more months, the construction and infrastructure sector could experience widespread delays, cost escalation, reduced investment activity, and prolonged uncertainty not just in the Middle East, but across Europe, Asia, and Australia as well.
