Saudi Arabia touts new use for Neom port after Iran warfare

Saudi Arabia is selling the port of Neom as a hub connecting the Gulf with Europe and Africa, as the dominion turns to its long-overlooked Crimson Coastline as a key industry outlet to counter Iran’s keep an eye on over the Strait of Hormuz.

Crown Prince Mohammed bin Salman’s Neom gigaproject, which incorporated a futuristic linear town within the wasteland, has been radically scaled again after huge price overruns.

However Neom is touting its less-glamorous port as one in every of a number of infrastructure initiatives that experience eased the industrial blow suffered when Iranian attacks on delivery successfully bring to an end Saudi Arabia’s oil-rich east from international industry.

The moves, introduced within the wake of the US-Israeli assault on Iran in February, have spurred the dominion and different Gulf states to chop their dependence at the strait.

“As trade routes shift and regional dynamics evolve, Port of NEOM is emerging as a key gateway,” Neom’s social media staff posted on X remaining week. “Strategically positioned on the Red Sea and fully operational, the port is already enabling faster, more connected trade.”

It’s unclear what items are being newly shipped at Neom, which doesn’t deal with oil. The corporate, owned by way of the dominion’s sovereign wealth fund, didn’t reply to a request for information on its task however says it’s absolutely operational. In 2024, it won 2.2mn tonnes of shipment, about 2 consistent with cent of Saudi imports.

Satellite tv for pc imagery from early March confirmed a lot of freight vans on the port, suggesting really extensive task. The harbour has been absolutely excavated and cranes put in at the quayside, pictures from Planet Labs confirmed.

“While Saudi Arabia was less badly affected by the war than other Gulf nations, its economic centre of gravity is now gradually shifting to the west coast,” a western diplomat stated.

The dominion has one at a time controlled to shift a big percentage of its crude oil to the Crimson Sea by the use of a pipeline constructed all through some other regional warfare: the Nineteen Eighties Iraq-Iran struggle. Exports from the west coast port of Yanbu have surged more or less fourfold since February, hitting greater than 29mn barrels a week in early April, in step with information analysis workforce Kpler.

Yanbu and the east-west pipeline were hit by way of some Iranian moves, however at greater than 1,200km around the Arabian Peninsula, the port is more secure from Tehran’s drones and missiles than the rustic’s main crude terminal, Ras Tanura at the east coast.

With Hormuz choked off, Saudi Arabia has sought to place itself as a regional transit hub.

Airways from Kuwait and Bahrain briefly moved some operations to Saudi airports. And Riyadh has allowed extra meals vans to move during the kingdom and waived garage charges, serving to neighbours that typically obtain meals by the use of Gulf ports.

“There has been a big effort to develop the Red Sea ports as part of the push into logistics,” stated Tim Callen, a visiting fellow on the Arab Gulf States Institute in Washington and previous IMF venture leader to Saudi Arabia. “Good progress has been made in improving infrastructure at ports and in introducing technology into customs procedures.”

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However the financial shift has been hampered by way of western Saudi Arabia’s restricted infrastructure — there is not any railway to the Crimson Sea and capability at Yanbu is constrained.

At its wartime top, Yanbu has shipped simply part the 59mn barrels a week that the rustic used to be exporting — most commonly from Ras Tanura — within the week sooner than the US-Israeli moves started, in step with Kpler.

A $27bn plan to construct a 1,500km educate line, branded a “landbridge”, from Riyadh to Jeddah has confronted repeated delays. Officers now say it is going to be finished by way of 2034.

Government introduced 5 new “logistics corridors” this month that hyperlink ports at the Gulf with the Crimson Sea, however the ones are in large part made up of pre-existing roads for freight vans to succeed in pre-existing railways by way of Riyadh and within the north.

Jeddah Islamic Port stays Saudi Arabia’s greatest port by way of capability, dealing with greater than 1 / 4 of shipment imports in 2024. An $800mn enlargement introduced remaining yr with Dubai-based DP International goals to boost its capability by way of a 3rd to 10mn twenty-foot identical devices (TEU).

Through the years, the Saudi executive has made a number of makes an attempt to make use of its 1,830km Crimson Coastline for financial initiatives to alleviate force off Jeddah and expand different portions of the coast, with various luck.

The dominion established Yanbu Business Town within the Nineteen Seventies as a part of an effort to diversify the financial system past gross sales of crude. Oil persisted to generate about 70 to 90 consistent with cent of state earnings for many years, till fresh efforts underneath Prince Mohammed reduce that determine to 55 consistent with cent remaining yr.

King Abdullah Economic City (KAEC) north of Jeddah has failed to attract enough companies and residents to fully populate it © Ho/AFP

A plan to lure Asian investors to the Jizan refinery near the Yemeni border was hampered by the 2008 global financial crisis. Meanwhile, King Abdullah Economic City (KAEC) north of Jeddah has failed to attract enough companies and residents to fully populate it.

More recently, the country has successfully built luxury resorts on virgin islands and pushed to compete with Dubai as a transport and logistics hub.

Neom, by far the most ambitious project, has been derided by some as an expensive fiasco. But its less flashy infrastructure may be finding a use, said Elana DeLozier, a Gulf expert and executive director of the Sage Institute for Foreign Affairs.

Neom “was probably not originally about hedging against threats to the Hormuz, but that could theoretically become more of a focus,” stated DeLozier.

Regardless that it has scaled again its maximum futuristic plans, it intends to head forward with Oxagon, initially supposed to be a part-floating commercial town, and has pivoted to development information centres and high-end production.

Neom’s port, now operational, is about to have about 1.5mn TEU annual capability. Portions of the port seemed to nonetheless be underneath development in satellite tv for pc pictures from early March. Newer imagery used to be no longer to be had because of Planet Labs’ blackout all through the Iran struggle.

Saudi Aramco’s Abqaiq oil processing plant © Fayez Nurladine/AFP/Getty Pictures

Regardless that the financial system’s westward shift permits extra coverage from Iran, it opens up different threats, comparable to instability in east Africa and assaults from Yemen’s Tehran-backed Houthi rebels, who’ve in the past focused Yanbu.

The Houthis, who’ve had a truce with Riyadh since 2022, restricted their involvement within the ongoing struggle to firing missiles into Israel, however the workforce focused the important thing east-west oil pipeline in 2019. The similar pipeline used to be hit by way of Iran previous this month, preventing 700,000 barrels consistent with day in throughput for a number of days.

The Houthis, then again, are “less of a threat than a regional hegemon who can impose its conditions on you such as Iran”, stated Sultan Alamer of the Center East Coverage Council.

However in the longer term, the dominion can’t reside with Iranian keep an eye on over the strait, the western diplomat stated.

“While the pipeline, and Red Sea access, gives them options, the strait is still too strategically important to Saudi Arabia,” he defined.

Further reporting by way of Alison Killing and Verity Ratcliffe. Knowledge visualisation by way of Chris Cook dinner and cartography by way of Allysa Honra and Andrew Francisco