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Amid escalating regional tensions linked to Iran and the near halt of shipping through the Strait of Hormuz, business experts in the Middle East warn of significant risks, as well as potential opportunities for strategic adaptation.

Hisham Ezz Al-Arab, CEO and Managing Director of Commercial International Bank (CIB), Egypt’s largest private bank, told Global Finance that some oil shipments may reroute via the Suez Canal as an alternative pathway.

Ezz Al-Arab highlighted the immediate impact on regional financial markets, noting increased pressure on emerging economies and local currencies as investors shift toward safe-haven assets. “The region faces high uncertainty, with markets reacting more sharply than during the 12-day war in June. Oil prices have surged above $100 per barrel—the first time since 2022—due to the closure of the Strait of Hormuz, which controls roughly 25% of global oil and 20% of gas shipments. Some refineries have halted operations due to security risks, posing a major threat to Gulf Cooperation Council countries, especially Qatar and Kuwait, given their heavy reliance on oil and Hormuz transit, along with rising shipping and insurance costs,” he explained.

Impact on Egypt’s Economy
On Egypt specifically, Ezz Al-Arab noted that the crisis has triggered significant outflows from emerging markets, including Egypt, weakening the Egyptian pound against the dollar to historic lows and boosting demand for safe-haven assets like gold and the dollar. In the long term, he warned of potential inflationary pressures and the likelihood that central banks may hold interest rates steady.

Central Bank Policy Outlook
Regarding exchange rate policies, Ezz Al-Arab said: “The Central Bank of Egypt has managed the foreign exchange market flexibly, particularly in remittance conversions. With a decline in interest rate-driven trades—estimated at $7–8 billion of a total $35–40 billion—the pound moved from roughly 47 to 53 EGP per USD. The shift to a flexible exchange rate has proven a crucial tool for absorbing external shocks, and the central bank will not hesitate to allow gradual adjustments as long as capital flows continue.”

Opportunities for Egypt
Ezz Al-Arab also noted that the crisis presents opportunities for Egypt, which hosts alternatives to the Strait of Hormuz, such as the 2.5 million barrels per day SUMED pipeline and potential links to Saudi Red Sea pipelines with 5 million barrels per day capacity. This positions Egypt as a strategic partner in the current crisis, granting preferential access to congested oil markets.

He added that the Suez Canal will likely benefit directly, as ships from Hormuz may reroute to Jeddah and Yanbu on Saudi Arabia’s western coast, while European-bound cargo will face lower risks via the canal. Regional tensions may also push some tourists to seek alternative destinations, with Egypt benefiting from its strategic location and strong, diverse tourism sector.