Strait of Hormuz Disruptions Delay Steel Supply
Manufacturers should expect longer lead times and higher project costs as supply chains bypass traditional ports.
Updated on Oct. 28, 2026 in Oil and Gas
Live Poll
Do you feel your local industry's economic stability is getting better or worse due to regional conflicts?
Shipping disruptions in the Strait of Hormuz recently forced a steel shipment destined for Abu Dhabi to be diverted to India, delaying critical supply for Al Gharbia Pipe Company by two months. This logistics bottleneck compounds production slowdowns already affecting regional manufacturers as project timelines shift.
Why it matters
Operators face heightened supply chain volatility as geopolitical risks force cargo diversions and extend lead times beyond standard storage windows. These disruptions threaten to inflate project costs by nearly 20 percent as manufacturers manage deferred project timelines and complex logistics.
Al Gharbia Pipe Company, which has a 400,000-tonne annual capacity, produced more than 250,000 tonnes in 2024 and 2025 but faces constraints on its 60,000-tonne production goal for December 2026. Regional pipeline bypass investments currently total $25 billion to $30 billion.
The players
Al Gharbia Pipe Company
An Abu Dhabi-based manufacturer specializing in large-diameter longitudinal submerged arc welded steel pipes for the energy sector.
The details
The diversion to Jakhau, India, forces Al Gharbia Pipe Company to manage raw material arrivals outside its standard 30-day storage window. With the plant located 10km from its primary intake at Khalifa Port, reliance on international suppliers in Europe, Japan, and South Korea necessitates precise scheduling that is currently compromised by port avoidance protocols. Manufacturers must now balance these forced shipment lags against the overhead of under-utilized capacity.
Timeline
December 2026 marks the deadline for completing 60,000 tonnes of pipe production.
2027 represents the target year for ramping production back to 200,000 tonnes.
The next 12 to 24 months are projected to show an active pickup in market demand.
Market Landscape
Current logistics disruptions reflect a broader trend where project deferrals follow $67 billion in 2026 greenfield project approvals. These delays contrast with the $100 billion in pipeline projects awaiting progress across the Middle East.
Supply chain managers should recalibrate inventory buffer policies to account for potential multi-month delays in regional maritime transit. Operators must also prepare for capital expenditure adjustments if project costs materialize as projected within the next 24 months.
The takeaway
Operational resilience in the current environment requires revisiting procurement lead times to buffer against unexpected transit diversions. Keep a close watch on regional bypass project spending as a leading indicator for infrastructure development timelines.
Further reading
For broader trends in regional supply chain stability, see Oil and Gas.
Live Poll
Do you feel your local industry's economic stability is getting better or worse due to regional conflicts?
