Now in its third month, the U.S.-Israeli war with Iran has triggered the largest supply disruption in the history of the global oil market according to the International Energy Agency (IEA), adding renewed incentive to the Gulf countries’ plans to diversify their energy mix and economies more broadly.  

A flurry of sizeable investments advancing such plans have been announced over the last couple of months.    

In April, Abu Dhabi’s renewables champion Masdar signed a binding agreement with France’s TotalEnergies to establish a $2.2bn 50/50 joint venture that will merge their onshore renewable activities in nine countries across Asia. 

In early May, Abu Dhabi sovereign wealth fund Mubadala Investment Company took a significant minority stake in San Francisco-based renewables management platform, Power Factors, whose software is used by 70% of the world’s 50 largest renewable energy producers. 

It also invested $325m in Orsted’s Hornsea 3 project off the east coast of the U.K. this month. When combined with Hornsea 1 and 2, it will become the world’s largest single offshore wind farm with a total capacity exceeding 5 Gigawatts (GW).  

“A lot of these projects are long-laid plans,” Robin Mills, CEO of Qamar Energy, a Dubai-based energy advisory company, told Fortune.  

“I think there is also an acceleration taking place due to Gulf countries increasingly considering their domestic energy security. Current events are leading to an improved investment landscape for their overseas renewables portfolios due to the desire to be more diversified and strategic.”  

In January this year, Masdar’s global renewable energy capacity hit a notable milestone of 65 GW – up from 51 GW in 2025–placing it two-thirds of the way towards its goal of reaching 100 GW capacity by 2030. 

“The UAE is keen to monetize its oil resources more quickly in anticipation of peak global demand as well as in order to free up larger gas supplies to cater to its ambitious industrial and AI development plans”

Robin Mills, CEO of Qamar Energy

Since its establishment in 2006, the company has invested $45bn across six continents and plans to deploy an additional $30-35bn in equity, green bonds and project finance this decade. It wants to add an average of 10 GW of new capacity each year.  

The UAE’s decision in April to leave OPEC crystallized a notable divergence from fellow members on the future role of oil.   

The Gulf country is now targeting an increase in its oil production capacity to 5 million barrels per day (bpd) by 2027, up from the 3.4 million bpd it recorded in January 2026.   

“The UAE is keen to monetize its oil resources more quickly in anticipation of peak global demand as well as in order to free up larger gas supplies to cater to its ambitious industrial and AI development plans,” said Mills, noting how gas is often produced in association with oil, and vice versa.  

But while the Iran war is strengthening the Gulf Cooperation Council’s medium to long-term strategic commitment to the energy transition, it is also threatening the planned buildout of domestic renewable projects.  

Data published by Norway’s Rystad Energy in mid-May shows that Gulf solar PV imports collapsed in March; the UAE’s imports fell to 160 MW from 767 MW the previous month, while Saudi Arabia’s dropped from 704 MW to 80 MW. Oman recorded zero. 

This looks set to pose challenges to Oman which signed a major contract in May for a 24/7 renewable energy project that combines wind, solar and battery storage that is expected to provide firm capacity of around 770 MW.  

The scheme forms part of a larger 2.7 GW hybrid renewable energy development spanning the Mahout and Duqm areas on Oman’s coast, with the country targeting 30% of electricity generation from renewables by 2030.  

With much of the Gulf’s clean energy supply chain disrupted by the ongoing blockade, freight rates on the Shanghai to Gulf and Red Sea route have hit record highs on the back of a spike in fuel costs and the intense competition to find trucking capacity to transport cargo by road. 

The cost to ship a standard 20ft container (TEU) on the Shanghai to Gulf and Red Sea route ballooned from $980 before the outbreak of the war to $4,131 in the week to 15 May, according to shipping data provider Clarksons Research.  

This surpasses even the Covid-19 pandemic peak of $3,960 per TEU in 2021.  

Rystad Energy now estimates a net delay of between three and twelve months across the active renewable energy pipeline in the Middle East. 

“The Hormuz disruption means that capital that might have flowed into domestic project finance is being redirected toward more stable deployment environments while supply chain uncertainty persists,” Christopher Gooding, an energy transition analyst at Cornucopia Capital and a research fellow at Gulf Sustain, told Fortune.  

“The critical variable is duration. If the Hormuz disruption extends into H2 2026, the three-to-twelve-month delay range skews toward the higher end, and some projects currently in procurement will likely be restructured or deferred to 2027.”