Six-month US-Iran conflict raises Thai shipping cost risks
Thai businesses are urged to manage Gulf shipping costs and delivery risks while maintaining trade ties with the United Arab Emirates.
- A six-month conflict between the US and Iran has disrupted shipping through the Strait of Hormuz, forcing vessels to use longer, alternative routes.
- The rerouting of ships has increased transport distances and costs, which are further inflated by higher war-risk insurance premiums for operators in the region.
- For Thai businesses, these factors translate directly into more expensive shipments, longer delivery times, and higher overall import costs.
- The conflict has also interrupted oil shipments, pushing up fuel prices and adding another source of cost pressure on transport.
Disruption to Gulf shipping routes could raise transport costs and lengthen delivery times for Thai businesses, the Dubai office of the Department of International Trade Promotion (DITP) warned in a report published on September 1. The office urged companies to keep inventories and delivery arrangements flexible while retaining their presence in the United Arab Emirates (UAE), Thailand’s largest export market in the Gulf Cooperation Council (GCC).
The DITP assessment describes how six months of conflict between the United States and Iran have affected Gulf energy, logistics, aviation, property, tourism and capital markets. Governments and businesses across the region have accelerated efforts to manage risks arising from vulnerable transport routes and infrastructure.
Thai-Gulf trade reaches US$23.06 billion as exports fall
Thailand’s two-way trade with GCC countries totalled US$23.06 billion in the first seven months of 2026, according to DITP’s Dubai office. Exports were valued at US$4.637 billion, down 1.4%, while imports rose 20.95% to US$18.423 billion.
The UAE remained Thailand’s largest export market within the GCC during January–July 2026, with bilateral trade increasing by 26.87%, the office reported. Despite the additional costs and risks, DITP identified the UAE as a market where Thai businesses should maintain their trading relationships and continue looking for opportunities.
Hormuz diversions add distance and insurance costs
Shipping traffic through the Strait of Hormuz has fallen sharply, prompting operators to use alternative ports and routes to spread their risks, according to the DITP report. These include Fujairah in the UAE and Sohar, Duqm and Salalah in Oman, all outside the strait, as well as routes around the Red Sea.
The diversions have increased shipping distances and regional transport costs, while operators also face higher war-risk insurance premiums. For Thai businesses, those transport and insurance pressures could mean more expensive shipments, longer delivery times and higher overall import costs, DITP’s Dubai office warned.
Energy disruption adds another source of cost pressure. Before the conflict, about one-fifth of global oil supplies passed through the Strait of Hormuz, and interrupted shipments have pushed up oil and petroleum-product prices, particularly diesel, according to the report. Damage to regional energy infrastructure could reach US$58 billion, while oil prices remain volatile as tensions change.
Gulf airlines recover as tourism and property weaken
The DITP review describes a rapid recovery in Gulf airline capacity alongside continued pressure on tourism and property. Passenger capacity among GCC airlines fell by more than one-third in April compared with a year earlier, but the year-on-year shortfall had narrowed to about 5% by August.
November flight schedules cited by DITP point to further capacity increases on major routes compared with April. Scheduled seat capacity on Singapore and Sydney services was more than double the April level, while New York was up 57%, London and Milan each rose 39%, and Paris increased 28%.
Tourism remained under pressure from fewer visitors, despite accounting for about one-eighth of the UAE’s gross domestic product and supporting almost one million jobs. The DITP report cited a World Travel & Tourism Council (WTTC) estimate that the Middle East was losing at least US$600 million a day in visitor revenue.
The DITP review also reported declines of approximately 20% in hotel occupancy and revenue per room in the year to July, alongside a potential loss of about 137,000 tourism jobs across the GCC in 2026.
Some hospitality businesses have used the slowdown to improve their operations. Several leading Dubai hotels have accelerated renovations and service upgrades, while restaurants have faced the combined pressure of fewer customers and higher ingredient and transport costs, according to the report.
In its property assessment, DITP reported that uncertainty had prompted developers to postpone new project launches, with off-plan residential sales falling by almost 90% between the first and second quarters. Dubai nevertheless delivered about 27,000 homes in the second quarter, the highest level in five years. Residential transactions in Dubai totalled approximately 86,000 between January and June 2026, down nearly 13% from a year earlier.
GCC capital markets have proved more resilient overall, although Dubai and Qatar recorded double-digit declines, the report said. Saudi Arabia’s market continued to perform well, supported by a relatively limited impact on the non-oil economy, higher oil prices and the country’s ability to export oil through the Red Sea.
Thai firms urged to retain UAE ties and flexible delivery plans
DITP’s Dubai office advised Thai businesses to monitor security conditions, shipping routes, freight rates and insurance premiums closely. Flexible inventory management and delivery schedules are particularly important for goods with high transport costs or those dependent on imported supplies.
The UAE remains an important market and a regional centre for trade, distribution and logistics despite the disruption. DITP’s Dubai office therefore recommended maintaining existing commercial ties while identifying new opportunities as GCC shipping routes and supply chains are reorganised.
