Trump’s Gulf gamble: Oil, leverage and shifting alliances

Over the past few days, attention across the Arab region and beyond has focused on US President Donald Trump’s visit to Saudi Arabia, Qatar and the UAE. This is his first foreign tour since returning to the White House—excluding his stop in Rome to attend the funeral of the late pope.

Although Trump’s official line is that he seeks to secure large-scale investments from the three Gulf monarchies, most observers have been more concerned with the political signals. The trip has prompted questions about whether it heralds a strategic shift in Washington’s approach to the Arab world.

Trump and Netanyahu

With Trump, economic goals are rarely separable from political motives. He began his second term amid the wreckage of a faltering trade war, and now needs financial backing from Gulf capitals to deliver on the grand promises he made at his "Liberation Day" rally. But with Israel’s war on Gaza slowly winding down, many regional cards are being reshuffled. Trump appears to have chosen Riyadh as the starting point for that reordering.

One pressing question is why Trump chose Saudi Arabia over Israel for the first leg of his Middle East tour. On the surface, his relationship with Israeli Prime Minister Benjamin Netanyahu appears strained. This has been evident in Trump’s calls for an end to the war on Gaza and the release of hostages, and earlier in his proposal—over two months ago—to allow humanitarian aid into the besieged strip.

It is too early to judge how this visit will reshape ties with America’s favored ally, particularly as Israel continues its campaign of ethnic cleansing in Gaza and the West Bank. Nor is it clear how Washington plans to contain Iran, whose regional clout has receded. Still, there are signs of a shift. Trump is reportedly willing to accept a civilian nuclear program in Saudi Arabia without demanding normalization with Israel.

In the background, US officials point to movement in the Iran nuclear file, just days after a tacit agreement was reached to end American airstrikes on the Houthis—an agreement that notably does not include Israel, which continues to face rocket fire from Yemen.

Predicting the unpredictable

Trying to divine Trump’s strategic intentions is a fool’s errand. This is a president who launched a global trade war for a week before narrowing its focus to China—and just days ago, he celebrated an imminent deal with Beijing. Such volatility makes it difficult to draw conclusions. Yet that failure to deliver on his earlier promises may also explain what he seeks in the Gulf.

Trump is under pressure to compensate his base for unmet expectations. Chief among these was the return of manufacturing to American soil, to be achieved through high tariffs on key trading partners. Thus far, little has materialized.

His foreign policy record offers no respite. His initiative to end the war in Eastern Europe did not yield peace, but rather allowed Moscow to gain ground against Kyiv. It also triggered alarm in European capitals, where leaders bristled at the rollback of US security commitments under NATO, and at escalating economic tensions between Washington and the EU.

A transactional realignment

This moment has created a window of opportunity for fabulously wealthy Gulf states, particularly Saudi Arabia, the UAE and Qatar, to carve out a role in rescuing Trump’s agenda. In return, they hope to widen their own sphere of influence in a region increasingly up for grabs.

It is a mutually convenient arrangement. These states have the cash, and are not entangled in trade disputes with Washington. Unlike China, Japan or the EU, their economies are based on exporting oil and gas—commodities that America still needs.

Recent estimates suggest that Gulf sovereign wealth funds control more than $4 trillion in assets, with substantial holdings in the US, either directly or through affiliated state entities.

While the US dollar remains the world’s dominant reserve currency, its position is weakening. America’s share of global manufacturing and trade is declining. The dollar's slice of global reserves fell from 72% in 2000 to 58% by 2022. Today, just 56% of international trade is denominated in dollars. The rest is increasingly handled in euros, yen and—more recently—Chinese yuan.

These shifts raise the stakes for maintaining petrodollar flows—dollars earned by oil-exporting countries and typically reinvested in US assets, reinforcing the dollar’s global dominance. That gives the Gulf’s traditional role renewed importance. It is in this context that Trump’s Gulf tour must be seen: part of a broader strategy to shore up the dollar’s global standing and his own domestic political fortunes.

Who gains most?

How Gulf states play their cards now could prove pivotal. In the short term, they might secure a green light for a Saudi civilian nuclear program. They may also persuade Washington to normalize relations with Syria’s post-war regime, under Saudi and Qatari auspices. Perhaps Trump will even lean on Israel to end its campaign in Gaza.

More ambitious proposals, like Saudi Arabia’s demand for a Palestinian state in exchange for joining the Abraham Accords, are less certain. American domestic politics—particularly the influence of Israel’s supporters—will shape what is possible.

Meanwhile, the Gulf continues to court Beijing. China is already the region’s biggest buyer of oil and gas. Any US cooperation must now compete with the East.

For now, Trump’s early missteps have only served to amplify the strategic value of Gulf monarchies. Where this trajectory leads remains to be seen.