Middle East conflict leaves breakbulk and project cargo players in limbo

The military conflict in the Middle East is now focused firmly on the Straits of Hormuz in the Persian Gulf.

Following US and Israeli strikes on Iran at the end of February, the Islamic regime imposed a blockade of the world’s most important energy transport route. This has triggered a period of considerable uncertainty and disruption for the ocean freight sector and its customers, including multipurpose vessel (MPV) operators and breakbulk/project cargo shippers, serving markets in the region.

Estimates put the number of vessels, of all types, stuck in the waterway at around 1,000.

While oil and gas shipments are most at risk, the impact on breakbulk cargo is significant, too. Saudi Arabia, especially at Jubail, and the UAE, particularly at Jebel Ali Port, are major hubs for project cargo and industrial shipments.

At the time of writing, the Islamic Revolutionary Guard Corps had stepped up attacks on ships and, given the US decision to hold off on military escorts for vessels through Hormuz – judging it to be too dangerous for warships – there was a heightened prospect of its closure being prolonged.

Key Exports and Imports

Major breakbulk exports from the Middle East include petrochemicals and plastics, aluminum and steel, oil and gas equipment, fertilizers, such as urea, sulphur, reduced iron ore, and construction materials.

An under-estimated and often overlooked export commodity from the region is urea. Shipped in bags, drums, or bulk, it has important uses as a fertilizer, contributing to agriculture and global food security, as well as a feed supplement and starting material for the manufacture of plastics and drugs.

As for imports, these focus on project cargo and heavy machinery, construction materials, agricultural products, and industrial components.

Immediate Impacts

“The Gulf’s construction and industrial sectors rely heavily on multi-purpose and handysize dry bulk vessels to move machinery, chemicals, grain and other essential goods. Any prolonged disruption at Hormuz would therefore strain regional supply chains,” according to maritime research and consulting services specialist Drewry Shipping Consultants, in a market advisory earlier this month.

The company went on to note that the immediate impacts of the closure of Hormuz were a surge in insurance costs due to higher war risk premiums; escalating oil prices, leading to an increase in fuel expenses, directly affecting voyage economics; extended waiting times for ships, disrupting schedules and contractual commitments; and operators seeking alternative corridors, increasing tonne-miles and thereby shipping demand.

They also include refinery shutdowns and damage to infrastructure in Iran and also in the Gulf states, following drone and missile strikes, lowering industrial output, and slowing down energy and construction projects.

Uncertain Outlook for Project Cargo

Commenting on the main features of the breakbulk trade to and from the Middle East, Drewry’s senior research analyst, MPV, Anurag Kumar, told AJOT in an interview that overall, it leans slightly toward imports, but this depends on the type of cargo.

“While general cargo is fairly balanced between exports - steel, aluminum, and petrochemical products and imports - industrial materials, project cargo is more import-driven, the region bringing in heavy machinery, modules, and equipment for oil and gas, energy, and infrastructure projects.”

A considerable volume of project cargo passes through the Straits of Hormuz, Kumar revealed. Data from Drewry showed that in January and February 2026, it accounted for 8% to 9% of all vessel traffic, underscoring its strategic significance. In contrast, general cargo vessels represented only 1-to-2%.

“If the war continues, oil and gas projects, which drive demand for project cargo, could be delayed or stopped, creating a ripple effect across the sector. Additionally, project carriers operating highly specialized vessels, built for certain cargo types, could be particularly exposed if the disruption drags on as there is little scope for them to be used for other purposes,” he explained.

Threat to Thriving PV Module Trade

Over the past two years, the Middle East has emerged as one of the world's leading photovoltaic (PV) markets, according to the Shanghai Metals Market (SMM), an integrated internet platform of benchmark prices and analysis of the metals & new energy industry, which has generated strong demand for project cargo services.

Various governments in the region have established distinct PV targets, such as Saudi Arabia's 'Vision 2030' plan, which aims to generate 50% of its electricity from renewable energy, and strategic plans like the 'Dubai Clean Energy Strategy 2050'. Meanwhile, regions such as Oman have also become critical hubs for the overseas expansion of the PV manufacturing supply chain.

On the module import demand side, the region shows a high degree of reliance on the overseas supply chain, with China the absolute core source country. PV modules exported from China to the Middle East account for 95% of the total import volume, with an overall year-on-year increase of almost 75%.

The SMM underlined that geopolitical turbulence in the Middle East is exerting “a bidirectional impact” on the global PV market. In the local market, the turbulent situation (the military conflict) directly leads to the postponement of PV installation projects within the Middle East, it noted. However, the upside, from a long-term perspective, is that future reconstruction efforts based on infrastructure restoration will further stimulate the potential demand for PV-related products in the region.

Regarding the global supply chain, the obstruction of transportation hubs in the Middle East is triggering logistics delays and cost increases for other overseas markets, such as Europe, SMM added.

Little Visibility on Return to Normal

At the start of the war, Drewry warned that even a one-week shutdown of the Strait would hurt shipping economics and that if it went on for several weeks, the damage could be immense, causing unprecedented freight volatility, taking insurance and fuel costs higher, and reducing the ability to deliver breakbulk cargoes to their destinations in the Gulf.

History showed that when previous military conflicts ended, there was a surge in demand for project cargo, especially heavy machinery, oil and gas equipment, steel structures, power generation parts, and industrial materials as rebuilding began.

However, today, there is little or no visibility as to when passage through Hormuz will be normalized. Some political commentators argue this can only be achieved through Iranian regime change through ‘boots on the ground’, an option that President Trump and his administration have until now appeared to have ruled out.

At time of writing and short of a dramatic change in events which restores trade stability in the Middle East and in the Gulf specifically, breakbulk and project cargo players looked set to continue in their state of limbo.