The Trump administration has proposed investing $5 billion into a new fund aimed at rebuilding energy infrastructure in the Middle East that was damaged during the seven-month conflict with Iran. This initiative also seeks to lessen the region's dependence on the Strait of Hormuz for oil and gas transportation. The proposal suggests that eight of Washington's regional partners, including Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait, Oman, Iraq, and Jordan, would contribute an equivalent amount, bringing the fund's total to $10 billion. This fund, named the Partnership for Allied Trust and Construction (PACT), would be managed by the US Development Finance Corporation.
The conflict has significantly impacted global energy markets, destroying pipelines, refineries, and other vital infrastructure across the region through missile and drone strikes. Officials acknowledge the high cost of rebuilding these facilities. The proposed fund prioritizes investments to bypass the Strait of Hormuz, restore energy flows, secure critical material exports, harden assets against future attacks, and rebuild essential domestic infrastructure. Despite the ongoing discussions, it remains uncertain whether all potential participating countries will agree to the terms, with some Middle Eastern officials questioning the timing of reconstruction before a peace deal with Tehran.
The necessity for this fund is underscored by the continued volatility in the Strait of Hormuz. Recent incidents include two tankers being struck on Monday, one by an unknown projectile injuring two crew members, and another by debris. Shipping volumes through the Strait are drastically below pre-war levels, with only 17 commodity vessels crossing over a recent weekend, compared to 37 a week prior, and an average of 125 large commercial vessels daily before the conflict. Qatar is actively mediating to secure a short-term agreement to reopen negotiations between the US and Iran.
