In one of the clearest signals yet that the Iran war is beginning to freeze investment across the Gulf, Australian infrastructure giant Macquarie has quietly walked away from one of the region’s most anticipated energy deals — a move that raises urgent questions about the future of Gulf dealmaking at a time when the region’s oil export infrastructure is already under severe strain.
The Deal That Collapsed
Macquarie has withdrawn from bidding for a stake in Kuwait’s oil pipeline network worth up to $7 billion, becoming one of the first known investors to pull out of a Gulf deal due to the Iran war. The Australian infrastructure investor notified Kuwait Petroleum Corporation on March 13 that it was exiting the process because of the conflict and uncertain outlook, as dealmakers try to press ahead with the transaction despite unprecedented regional volatility.
Kuwait’s long-mooted midstream infrastructure farm-out deal had been one of the Gulf’s most closely watched transactions, with several major investors including KKR and BlackRock still believed to be in the process. Macquarie and KKR declined to comment on the matter; KPC and BlackRock did not respond to requests for comment.
Why Kuwait Is Especially Vulnerable
The geography here is brutal. Kuwait ships 100 percent of its crude exports through the Strait of Hormuz — the narrow waterway between Iran and Oman that has been effectively shut since the U.S. and Israel launched strikes on February 28. Unlike the UAE, which has some pipeline flexibility through Abu Dhabi infrastructure, Kuwait has no alternative export route whatsoever. Kuwait Petroleum Corporation has already invoked force majeure on its export obligations, joining Qatar and Bahrain in suspending contractual commitments it can no longer fulfil due to the Hormuz blockade.
The effective closure of the waterway has forced Kuwait, Saudi Arabia, the UAE, and Iraq to cut oil production, with a growing stock of barrels piling up and depleting storage capacity. For an investor being asked to commit billions of dollars to pipeline infrastructure in this environment, the risk calculus is stark.
A Chilling Effect Across the Region
Macquarie’s exit may be the most visible sign of investor anxiety, but it is unlikely to be the last. Some investors are now reviewing material adverse change clauses on deals — contractual provisions that allow them to back out of agreements — while financing is also becoming harder to raise as lenders begin demanding higher interest rates for exposure to Gulf-based corporates. One source told Reuters that it was unrealistic for sellers to set tight deadlines when investors are having to make decisions amid active airstrikes and economic uncertainty.
That said, dealmaking has not stopped entirely. Saudi Arabia’s King Abdullah Financial District is seeking to sell district cooling assets for more than $500 million, with non-binding offers submitted in early March, while Saudi infrastructure firm SISCO Holding is also pushing ahead with a water asset sale worth around $266 million.
The Bigger Picture
Daily exports of crude and petroleum products from the Arab Gulf have plunged by 60 percent since the war began, falling from over 25 million barrels per day to just 9.7 million barrels per day in the week ending March 15. According to IMF analysis, every 10 percent rise in oil prices corresponds to a 0.4 percent increase in inflation and a 0.15 percent reduction in global economic growth — and U.S. petroleum prices have already risen roughly 17 percent since the war started.
For Kuwait, the pipeline deal represented a once-in-a-generation opportunity to monetise its midstream infrastructure and attract long-term institutional capital. With Macquarie now gone and the Strait still closed, that vision looks increasingly distant.
