BlackRock Says $2.1 Trillion Gulf Spending Boom Could Reshape Global Capital Flows
BlackRock's top strategist says Gulf sovereign wealth funds are rerouting trillions away from global markets, and the ripple effects on Treasuries, equities, and AI infrastructure could be bigger than most investors expect.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
BlackRock (NYSE:BLK | BLK Price Prediction) Investment Institute strategist Ben Powell discussed in a Bloomberg interview on September 2 that he sees a major shift underway in Gulf spending as more of the Middle East’s oil wealth is expected to continue to be invested domestically.
Powell’s argument is that the marginal dollar of Gulf Cooperation Council surplus will increasingly stay inside the region rather than being recycled into global equities, Treasuries and trophy real estate.
A $2.1 Trillion Signal: Why More Gulf Money Is Being Invested Domestically
Ben Powell told Bloomberg, “We’re gonna see upwards of $2 trillion US dollars of strategic capex here in the GCC over the next several years. And I think the change, the marginal change, is gonna be more of the money is gonna stay here in the GCC.”
Powell’s main point is that sovereign wealth funds, including PIF, Saudi Arabia’s sovereign wealth fund, have already been pivoting more domestically in recent years, and the current conflict has sharpened that trend. In Powell’s view, “It’s an accelerant to, obviously, the preexisting plans for diversification. Oil and gas is still very important. That’s not gonna change. It’s a significant generator of cash, and that’s great. But at the margin, the urgency of deploying that cash into societal and economic diversification, which was already there, I think the urgency is even greater.”
Basically, if the rest of the world beefs up its energy independence, that could hurt the Gulf’s exports over the long term and increase the importance of the Middle East investing in domestic industries outside of oil and gas.
AI, Energy and Defense Are Becoming One Investment Theme
Powell’s second idea is that energy and defense will need investment alongside data centers. Powell said, “Data centers need defense. They need energy. So clearly there are distinctions, but there is an overlap. And I think it’s hard in this very complicated world to neatly parse security from the economy, from AI. They all kind of overlap.”
AI infrastructure increasingly overlaps with energy and national security. Data centers need enormous amounts of power, while the Pentagon is spending more on AI, microelectronics and advanced energy technologies. The GAO estimates data centers could account for up to 12% of U.S. electricity demand by 2028, while the Pentagon’s FY 2027 science and technology budget request is nearly 26% higher than the prior request.
Global Chokepoints Are Accelerating the Push for Self-Reliance
Powell talked about how the Strait of Hormuz and other conflicts have highlighted the importance of domestic investment: “We can rely less, sadly, on these strategic chokepoints. We can rely less on global trading partners, so we’re gonna have to do more here at home in the region. The good news is we’ve got the funding. We’ve got the talent. We’ve got the energy to do that.”
The same morning, Treasury Secretary Scott Bessent told the G20 that the Strait of Hormuz will be “a worthless piece of water” in two years as oil moves to land pipelines, and Bloomberg’s Jon Herskovitz reported that Iran has signaled it may target energy infrastructure in neighboring countries.
Reuters this week has separately cataloged Gulf pipeline and port investment spurred by the Iran war. On August 28, former Chevron (NYSE:CVX) Latin America president Ali Moshiri argued for tying U.S. energy security to its Western Hemisphere energy supply, so the U.S. could avoid chokepoints like Hormuz, the Red Sea and the Black Sea.
Key Takeaways
Ben Powell closed by saying, “We’re gonna see more partnership between government driving societal goals and capital markets, because simply put, capital markets is where the money is. So we’re seeing a need for more funding, be that in old-fashioned infrastructure, schools, hospitals, and roads, or all the new fun stuff around AI.”
Powell’s thesis is that Gulf capital is becoming more domestic, strategic, and interconnected across AI, energy, and defense. If that shift continues, the $2.1 trillion buildout could reshape global capital flows as well.
Contact [email protected] for any questions or corrections.
Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 250 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
He specializes in breaking down complex companies into clear, actionable insights for everyday investors, with a focus on fundamentals-driven research.
His work has also been featured on platforms including Seeking Alpha and Sure Dividend.
Outside of work, Thomas enjoys weight lifting and soccer.
