GCC Urged to Create Energy Swap Facility to Shield Against Future Hormuz Closures

Context The recent US‑Israel conflict with Iran has disrupted shipping through the Strait of Hormuz, exposing uneven vulnerabilities across the GCC. While Saudi Arabia and the UAE have rerouted some exports via Red Sea ports, Kuwait, Bahrain and Qatar remain largely cut off from global markets and face potential economic contraction. Leaders met in Jeddah on April 28 to pledge unity and explore practical solutions to the crisis.

Key Facts Kuwait, Bahrain and Qatar have been largely isolated from global markets and risk economic contraction. Oman LNG held roughly two swap tenders each month in 2024, routing U.S. Atlantic cargoes to Spain while supplying Asian customers with its own LNG. At the GCC consultative meeting in Jeddah on April 28, leaders pledged unity and explored solutions to the Hormuz crisis.

What It Means A dedicated energy swap facility would allow GCC members to exchange titles to LNG or crude oil, enabling a buyer in Asia to receive Omani or Qatari gas while the physical cargo travels via alternative routes such as Yanbu, Fujairah or Duqm. This approach mirrors past swaps, like Oman’s monthly tenders that moved U.S. Atlantic LNG to Spain while fulfilling Asian demand with its own supply. By establishing the mechanism now, the bloc can reduce the chance of a zero‑sum competition that erodes its collective market influence.

What to watch next Monitor whether GCC finance and energy ministers formalize a swap framework at the upcoming ministerial summit in Riyadh later this year.