What happens if Gulf producers deploy 'nuclear option' to end Middle East war?
By: Alex Kimani (OilPrice via MSN)
President Trump is running out of time. The Gulf oil producers have far more influence and geopolitical power than does Trump.
S E E D E D C O N T E N T
March 16, 2026 -- The shutdown of commercial traffic through the Strait of Hormuz has suddenly handed Gulf oil producers enormous leverage over the escalating Middle East war. With roughly 15 million barrels per day of crude exports effectively stranded, Gulf Cooperation Council (GCC) nations could deploy what amounts to an energy “nuclear option”: declaring force majeure across their oil and gas exports and deliberately removing another 20% of global supply from the market.
Such a move, unpacked in an opinion piece in Middle East Eye, would instantly trigger a global economic shock and could force the United States and Israel to reassess their military campaign against Iran.
Over the weekend, the Strait of Hormuz effectively stopped functioning as a commercial shipping route. According to vessel tracking data, zero commercial crossings were recorded on Saturday–down from roughly 2.6 crossings per day since the war began and about 135 daily crossings before the conflict. The disruption has prompted emergency diplomatic discussions in Europe, where foreign ministers are meeting Monday to consider naval escorts for tankers attempting to transit the waterway.
The de facto closure of the passage has resulted in severe economic losses for GCC countries, with estimates that approximately 14.8 million barrels of oil produced by GCC nations every day are left stranded without a viable export route. Collectively, these countries could be losing up to $1.2 billion in export revenues per day, and are estimated to have lost more than $15 billion in oil and natural gas revenues since the conflict began. The GCC includes Saudi Arabia, UAE, Qatar, Kuwait, Oman, and Bahrain.
Gulf producers could be willing to bet that cutting off another 20% of the world’s oil supply could force the U.S. and Israel to stop attacks on Iran. After all, there’s little incentive at the moment for the two to stop the war, with Israel relying on its deep-pocketed ally to finance operations while Trump has repeatedly stated he is "not ready to declare victory" or accept current negotiation terms.
A collective halt of oil exports would trigger a major global economic shock and instantly shift the balance of power to Gulf producers, compelling the warring nations to immediately reassess their positions.
The GCC has a clear justification for declaring force majeure. Saudi Aramco's 550,000 bpd Ras Tanura refinery was shut down following a drone attack attributed to Iran on March 2. Two Iranian drones were intercepted by Saudi air defenses; however, falling debris ignited a fire at the giant facility. While the fire was quickly contained and caused only minor damage, Saudi Arabia is still bearing the full brunt of the war, with OPEC’s largest producer estimated to have lost nearly $5 billion in potential revenues so far. Meanwhile, Qatar has already declared force majeure on its LNG operations. On March 2, QatarEnergy halted liquefied natural gas (LNG) production at its major Ras Laffan and Mesaieed industrial cities following Iranian drone attacks, effectively cutting off a fifth of global LNG supply. Qatar’s Ras Laffan Industrial City serves as the primary hub for the country's massive LNG operations and is home to the world's LNG export complex. The city’s LNG plant features 14 LNG trains with a production capacity of approximately 77 million metric tonnes per year (mtpa).
Thankfully, most GCC nations have the necessary wherewithal to pull off such a drastic move thanks to their massive sovereign wealth funds. GCC SWFs are some of the largest in the world, managing approximately $5 trillion in assets, or nearly 40% of global SWF assets. Saudi Arabia’s Public Investment Fund (PIF) is the fifth-largest sovereign wealth fund in the world with ~$1.2 billion in assets. By mid-2025, the PIF's assets surpassed SAR 4.3 trillion ($1.15 trillion), marking a significant increase from 2024, aided by transfers of Aramco stakes and portfolio performance. Approximately 80% of the PIF's investments are focused within Saudi Arabia to drive Vision 2030 goals, with 55% of the portfolio allocated to alternative assets. Meanwhile, Abu Dhabi Investment Authority (ADIA) manages ~ $1.1 trillion in assets while Kuwait Investment Authority (KIA), the world's oldest sovereign wealth fund, manages over $1 trillion.
Saudi Arabia and its Gulf neighbors would normally be among the biggest beneficiaries of a sharp oil rally. Brent’s surge above $100 per barrel dramatically improves fiscal revenues for producers that rely heavily on crude exports to fund government spending and large-scale development programs. Riyadh in particular has spent years pushing for higher oil prices to support its ambitious Vision 2030 economic transformation plan. But the current crisis has created a far more complicated equation. With the Strait of Hormuz effectively shut and millions of barrels of Gulf crude unable to reach global markets, the price spike offers only limited relief if producers cannot physically move their oil.
GCC nations could be in a world of pain unless the Middle East conflict is quickly resolved, with estimates that Gulf GDP could drop by as much as 22% if the conflict carries on for 3-6 months. While Gulf states possess significant sovereign wealth funds to mitigate short-term impacts, prolonged closure is expected to cause severe fiscal pressure and widen their current account deficits.
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Will Trump begin sacrificing troops for oil to avoid a butt-hurt ego? The Gulf oil producers could force Trump to quit the war. That would be a major loss for Trump.
The whole thing is already a complete disaster. Nothing about it makes Trump look good.
Thankfully, most GCC nations have the necessary wherewithal to pull off such a drastic move thanks to their massive sovereign wealth funds.
Thankfully???? Somebody's parroting propaganda....
It's a buffer against Trump's incompetence. What the "thankfully" means is that Trump can damage the global economy but cannot destroy the global economy. Trump really can be controlled.
The other side of the question is what would Iran look like if those countries (who have been attacked by Iran, suffered damage and civilian casualties and are members of the Gulf Cooperation Council) were to do what the article suggests? I suggest that Iran would use that as "proof" that they were in the right and would continue to expand their influence over the region. IMO this type of action would do nothing to help secure their long-term position and would greatly benefit Iran and would eventually lead to another Gulf War when these countries are overrun by forces backed by Iran.
IMO this article does not read like a serious discussion around the current issues but rather an attempt to just toss shit against a wall to see what will stick.