Saudi Arabia is promoting the port of Neom as a hub connecting the Gulf with Europe and Africa, as the kingdom turns to its long-overlooked Red Sea coast as a key trade outlet to counter Iran’s control over the Strait of Hormuz.
Crown Prince Mohammed bin Salman’s Neom gigaproject, which included a futuristic linear city in the desert, has been radically scaled back after vast cost overruns.
But Neom is touting its less-glamorous port as one of several infrastructure projects that have eased the economic blow suffered when Iranian assaults on shipping effectively cut off Saudi Arabia’s oil-rich east from world trade.
The strikes, launched in the wake of the US-Israeli attack on Iran in February, have spurred the kingdom and other Gulf states to cut their dependence on the strait.
“As trade routes shift and regional dynamics evolve, Port of NEOM is emerging as a key gateway,” Neom’s social media team posted on X last week. “Strategically positioned on the Red Sea and fully operational, the port is already enabling faster, more connected trade.”
It is unclear what goods are being newly shipped at Neom, which does not handle oil. The company, owned by the kingdom’s sovereign wealth fund, did not respond to a request for data on its activity but says it is fully operational. In 2024, it received 2.2mn tonnes of cargo, about 2 per cent of Saudi imports.
Satellite imagery from early March showed a large number of freight trucks at the port, suggesting considerable activity. The harbour has been fully excavated and cranes installed on the quayside, images from Planet Labs showed.
“While Saudi Arabia was less badly affected by the war than other Gulf nations, its economic centre of gravity is now gradually shifting to the west coast,” a western diplomat said.
The kingdom has separately managed to shift a large share of its crude oil to the Red Sea via a pipeline built during another regional war: the 1980s Iraq-Iran conflict. Exports from the west coast port of Yanbu have surged roughly fourfold since February, hitting more than 29mn barrels per week in early April, according to data research group Kpler.
Yanbu and the east-west pipeline have been hit by some Iranian strikes, but at more than 1,200km across the Arabian Peninsula, the port is safer from Tehran’s drones and missiles than the country’s leading crude terminal, Ras Tanura on the east coast.
With Hormuz choked off, Saudi Arabia has sought to position itself as a regional transit hub.
Airlines from Kuwait and Bahrain temporarily moved some operations to Saudi airports. And Riyadh has allowed more food trucks to pass through the kingdom and waived storage fees, helping neighbours that usually receive food via Gulf ports.
“There has been a big effort to develop the Red Sea ports as part of the push into logistics,” said Tim Callen, a visiting fellow at the Arab Gulf States Institute in Washington and former IMF mission chief to Saudi Arabia. “Good progress has been made in improving infrastructure at ports and in introducing technology into customs procedures.”
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But the economic shift has been hampered by western Saudi Arabia’s limited infrastructure — there is no railway to the Red Sea and capacity at Yanbu is constrained.
At its wartime peak, Yanbu has shipped just half the 59mn barrels per week that the country was exporting — mostly from Ras Tanura — in the week before the US-Israeli strikes began, according to Kpler.
A $27bn plan to build a 1,500km train line, branded a “landbridge”, from Riyadh to Jeddah has faced repeated delays. Officials now say it will be completed by 2034.
Authorities launched five new “logistics corridors” this month that link ports on the Gulf with the Red Sea, but those are largely made up of pre-existing roads for freight trucks to reach pre-existing railways by Riyadh and in the north.
Jeddah Islamic Port remains Saudi Arabia’s largest port by capacity, handling more than a quarter of cargo imports in 2024. An $800mn expansion launched last year with Dubai-based DP World aims to lift its capacity by a third to 10mn twenty-foot equivalent units (TEU).
Over the years, the Saudi government has made several attempts to use its 1,830km Red Sea coast for economic projects to relieve pressure off Jeddah and develop other parts of the coast, with varying success.
The kingdom established Yanbu Industrial City in the 1970s as part of an effort to diversify the economy beyond sales of crude. Oil continued to generate about 70 to 90 per cent of state revenue for decades, until recent efforts under Prince Mohammed cut that figure to 55 per cent last year.
A plan to lure Asian investors to the Jizan refinery near the Yemeni border was hampered by the 2008 global financial crisis. Meanwhile, King Abdullah Economic City (KAEC) north of Jeddah has failed to attract enough companies and residents to fully populate it.
More recently, the country has successfully built luxury resorts on virgin islands and pushed to compete with Dubai as a transport and logistics hub.
Neom, by far the most ambitious project, has been derided by some as an expensive fiasco. But its less flashy infrastructure may be finding a use, said Elana DeLozier, a Gulf expert and executive director of the Sage Institute for Foreign Affairs.
Neom “was probably not originally about hedging against threats to the Hormuz, but that could theoretically become more of a focus,” said DeLozier.
Though it has scaled back its most futuristic plans, it intends to go ahead with Oxagon, originally intended to be a part-floating industrial city, and has pivoted to building data centres and high-end manufacturing.
Neom’s port, now operational, is set to have about 1.5mn TEU annual capacity. Parts of the port appeared to still be under construction in satellite images from early March. More recent imagery was not available due to Planet Labs’ blackout during the Iran conflict.
Though the economy’s westward shift allows more protection from Iran, it opens up other threats, such as instability in east Africa and attacks from Yemen’s Tehran-backed Houthi rebels, who have previously targeted Yanbu.
The Houthis, who have had a truce with Riyadh since 2022, limited their involvement in the ongoing conflict to firing missiles into Israel, but the group targeted the key east-west oil pipeline in 2019. The same pipeline was hit by Iran earlier this month, stopping 700,000 barrels per day in throughput for several days.
The Houthis, however, are “less of a threat than a regional hegemon who can impose its conditions on you such as Iran”, said Sultan Alamer of the Middle East Policy Council.
But in the long term, the kingdom cannot live with Iranian control over the strait, the western diplomat said.
“While the pipeline, and Red Sea access, gives them options, the strait is still too strategically important to Saudi Arabia,” he explained.
Additional reporting by Alison Killing and Verity Ratcliffe. Data visualisation by Chris Cook and cartography by Allysa Honra and Andrew Francisco
