Middle East Uncertainty Puts Pressure on Global Trade – Swedish Exporters Forced to Adapt

Rising tensions in Iran and the wider Middle East are creating a new layer of uncertainty for global trade, and Swedish exporters across all sectors and of all sizes are already feeling the effects.

Investment decisions across the region are being postponed, transport routes are becoming longer and more expensive, and companies are reassessing their strategies in an increasingly unpredictable geopolitical landscape.

Yet according to André Lundvall, Senior Country Risk Analyst for the MENA Region at Swedish Export Credit Agency (EKN), Swedish companies operating in the region are relatively well prepared.

“Many Swedish companies in the region have strong situational awareness and contingency planning. Several have also built up inventories that will last for a while,” Lundvall tells Techarena News.

At the same time, he cautions that the full consequences of the current situation are still difficult to assess.

“Ramadan is currently underway, which is normally the quietest period of the year in the region, with lower levels of activity and trade. That makes it harder to interpret the immediate effects.”

Uncertainty delays investments

The most immediate impact of the conflict is hesitation around new investments.

“This is not the time when companies decide to build new facilities or launch major investments in the region,” says Lundvall.

The core challenge, he argues, is uncertainty itself.

“As long as uncertainty remains, it will affect business decisions on multiple levels. The United States has indicated that it wants the process around Iran to be short, but the question is what comes next. In a worst-case scenario, we could see a prolonged conflict without a long-term resolution,” Lundvall says, and continues:

“If the situation stabilises relatively soon, the obstacles are manageable. But the longer the conflict lasts, the harder it will be for trade flows to return to something resembling normal.”

For global trade, the disruption is already visible in logistics.

Shipping companies are avoiding riskier routes and opting for longer, safer alternatives, which is driving up costs and extending delivery times.

For companies operating in the region, that could mean the need for larger financial buffers.

“Businesses will require higher margins, larger inventories, and more working capital.”

A relatively small but strategic export market

While the Middle East is not Sweden’s largest export destination, it remains an important market.

In 2025, Swedish exports to the Middle East and North Africa totaled SEK 65 billion, representing just over 3 percent of Sweden’s total exports.

Among the largest individual markets were:

• Saudi Arabia: SEK 12 billion
• United Arab Emirates: SEK 17 billion

The export mix reflects traditional Swedish industrial strengths, such as iron ore and timber, as well as transport vehicles and construction machinery. However, the region has recently also attracted interest from small and medium-sized companies in the tech and software sector.

“Especially the UAE, with Dubai and Abu Dhabi serving as a stepping stone for many companies into the wider region,” says Lundvall.

Global ripple effects

Sweden’s imports from the region are significantly smaller, totaling around SEK 6 billion, largely consisting of oil and other fossil fuels.

But energy is only part of the equation.

“It’s not just oil coming from the region. Natural gas is crucial for both Europe and Asia, and fertilizers from the region are shipped across the world.”

If supply disruptions intensify, the consequences could reach far beyond the Middle East.

Lundvall points to a potential parallel with the global effects that followed the Russian invasion of Ukraine.

“When Russian fertilizers were sanctioned after the invasion of Ukraine, it pushed global food prices higher,” he says.

Strategic shifts – and unexpected advantages

Shipping disruptions are already affecting trade between Europe and Asia, as longer routes increase both costs and delivery times.

Yet geopolitical disruption can sometimes reshape competitive dynamics.

With large parts of the Red Sea shipping route effectively closed or restricted, European companies may gain a temporary advantage in some sectors.

“From what I’ve heard in discussions with companies operating in the region, Swedish and European businesses could actually benefit when it comes to deliveries,” Lundvall says.

“In sectors that have faced intense competition from China, European companies may see some improvement because the route from Europe to the Middle East remains more accessible.”

A wait-and-see strategy

For companies considering entering the region, Lundvall’s advice is straightforward: proceed cautiously.

“The best approach right now is to wait and see. This is not the moment to go all-in on establishing new operations,” he says.

But he stresses that the Middle East remains an important market in the long run.

“The region will continue to be a strong market for Swedish companies to sell into and establish themselves in. It is not in anyone’s interest for the situation to remain as it is today.”