US President Donald Trump has proposed an initial $5bn American contribution to a fund for rebuilding infrastructure damaged in the war with Iran and developing alternative Gulf oil export routes, OilPrice.com reported. Its account drew on a Wall Street Journal report citing unnamed sources in Washington and Gulf states.
Washington would seek contributions from regional partners to bring the fund to $10bn. Called the Partnership for Allied Trust and Construction, or PACT, the initiative would involve Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait, Iraq, Oman and Jordan alongside the United States. OilPrice.com said energy infrastructure in most of those countries had been targeted by Iranian strikes, linking the attacks to the presence of US military bases.
Beyond reconstruction, the proposed financing would help Gulf producers develop routes that avoid the Strait of Hormuz. However, commentators cited in the report questioned whether a rebuilding initiative was premature while fighting continued and prospects for lasting peace remained limited. The Wall Street Journal characterised the proposal as recognition of the economic damage suffered by key regional US allies during the conflict.
Participation could also be complicated by differences in producers’ reliance on Hormuz, according to OilPrice.com. Iraq has a pipeline route through Turkey, although its capacity is substantially smaller than the route through the strait. Saudi Arabia used its East-West pipeline to redirect exports away from Hormuz, but the report said the line was under repair and Saudi oil was being moved on small boats to the Gulf of Oman.
The UAE, meanwhile, announced plans earlier this year to double the capacity of a pipeline serving Fujairah, outside Hormuz. OilPrice.com cautioned that pipelines remained vulnerable to attack, citing Houthi strikes in Saudi Arabia. The report stressed that alternative corridors could not remove security risks while the war continued, with refineries, oilfields and gas facilities also exposed. A UK-based Gulf security researcher quoted by the Wall Street Journal said regional states increasingly expected disruption to Hormuz to persist in the short to medium term.