Middle East: Escalating tensions in engine of global economy

THE countries of the Middle East play a vital role in the global economy and are often referred to as the engine of the global economy, as the region lies at the heart of the world's energy system.

- By Visvalingam Muralithas

It holds nearly half of the world's proven oil reserves and about one-third of its natural gas reserves. Nations such as Saudi Arabia, Iran, Iraq, Kuwait, and the United Arab Emirates are key to meeting global energy demand.

Key maritime routes, especially the Strait of Hormuz-through which one-fifth of the world's oil supply passes-highlight the region's strategic importance in both geopolitical and economic terms. Oil price stability is closely tied to the political and logistical conditions in this area. Any disruption in the region sends shockwaves through the global economy, affecting everything from fuel prices in Europe to manufacturing output in Asia.

The Middle East has historically been perceived as the world's primary supplier of fossil fuels, often reduced to the moniker of the "global fuel station." However, this view no longer captures the full breadth of the region's multifaceted economic significance. Today, the Middle East represents a critical node in the global economy-one that connects continents, facilitates trade, channels financial capital, drives innovation, and influences geopolitical dynamics. In an era marked by geopolitical realignments, climate transition, and technological disruption, the Middle East is not only maintaining its relevance-it is evolving into a diversified economic powerhouse.

Strategic trade corridors and global commerce

The Middle East occupies a pivotal geographic location, bridging Asia, Europe, and Africa. Its strategic importance is underscored by major maritime trade routes such as the Suez Canal, the Strait of Hormuz, and the Bab el-Mandeb Strait. These waterways handle trillions of dollars in goods annually, forming the logistical backbone of global commerce.

Financial power and global investment