Donald Trump’s return to the White House is a pivotal moment for Middle Eastern geopolitics and could redefine the region’s global standing, and geopolitical balance.
As a major stakeholder in Middle Eastern political and economic affairs, US foreign policy has had a significant impact on the region for decades. Although multifaceted, US interests in the Middle East since the end of World War II have largely revolved around propping up friendly governments militarily in order to safeguard the flow of oil and gas into global markets and sanctioning those who threaten this set-up.
The Middle East during Trump’s first administration was characterised by warm relationships with Gulf leaders and heavy sanctions on Iran. This included new arms deals with Saudi Arabia and the withdrawal from the 2015 nuclear deal with Iran. A second Trump administration has the potential to give further autonomy to allies such as the Gulf Cooperative Council (GCC) in the context of its regional integration into a security and economic bloc with increasingly diversified sources of investment. Additionally, Trump is likely to capitalise on his leverage over Israel’s Netanyahu and the shift in the balance of power to work towards claiming victory in attaining a ceasefire in Gaza. This piece will explore the principal Middle Eastern countries and sectors that stand to benefit and lose from a second Trump presidency.
Iran
The Islamic Republic of Iran has consistently demonstrated defiance towards Western hegemonic powers, persisting despite stringent sanctions intended to cripple the regime’s economy and limit its geopolitical influence. However, with Donald J. Trump’s recent presidential victory and his second tenure set to begin, uncertainty looms over Iran as it recalls the hardline stance that characterized their tense and hostile relationship during his first term as U.S. president.
Many Iranians hold an unyielding animosity and disdain towards the USA but more specifically towards Trump’s administration that orchestrated the January 2020 assassination of General Qasem Soleimani, an Iranian major general and commander of the Quds Force. Following the assassination of Soleimani, it feels as though the inevitable response towards Trump’s presidential victory is one of unyielding rejection. However, under Masoud Pezeshkian, a reformist politician and cardiac surgeon who won Iran’s snap presidential election in July 2024, the Islamic Republic has witnessed an undeniable shift towards pragmatism as opposed to the radical stance adopted by his hardline predecessors. A week after Trump won the U.S. elections, Pezeshkian said that Tehran will not be able to ignore its arch-foe the USA and needs to “handle its enemies with forbearance”. Pezeshkian also assured Iranian voters that he will do all in his power to lift the harsh sanctions that Trump imposed on Iran in 2018 and further escalated under Democrat Joe Biden. Pezeshkian strongly believes that sanctions have cut off the country from international markets and are driving the ongoing economic crisis, in contrast to his hardline opponents, who view sanctions as an opportunity for Iran to detach from the West and maximise its internal capabilities.
In his first address to the UN General Assembly since being elected, Pezeshkian proposed new nuclear negotiations with the USA and its partners in exchange for lifting sanctions. He condemned Trump’s decision to unilaterally withdraw from the 2015 nuclear agreement, the Joint Comprehensive Plan of Action (JCPOA), and described the sanctions strategy as one driven by coercion and filled with threats. He highlighted the opportunity to enter a new era, expressing readiness to engage with JCPOA participants if the commitments are fully and sincerely implemented, which could pave the way for further dialogue on other issues.
Nonetheless, due to Iran’s commitment towards asserting influence within its ‘Axis of Resistance’ and aiding the Palestinian cause both militarily and financially since October 8th, it is possible that the Trump administration may divert complete attention away from negotiating with the Islamic Republic regarding the nuclear deal and lifting sanctions, opting instead towards strengthening his alliance with Benjamin Netanyahu’s government in Israel. It is both expected and reasonable to predict that Trump’s Middle East policies will focus on reinforcing the priorities of hardline Israeli lobby groups, which played a pivotal role in shaping the outcome of the elections and facilitating his victory. The American Israel Public Affairs Committee spent tens of millions of dollars against congressional candidates, primarily Democrats, whom they deemed as insufficient in their support for Israel. Therefore, it is credible to predict that Trump may be puppeteered by an overpowering sense of loyalty towards the Israeli lobbyists who have not only shaped his Middle East policies but also gained significant influence within his cabinet. This will potentially steer his policy decisions to a more aggressive stance on Iran and the longstanding Palestinian question, which has defined the region since even before the establishment of Israel in 1948.
Setback for Iran, Opportunity for Trump
Another instrumental moment that has the potential to redefine and manipulate the trajectory of the already volatile region is the fall of Syria’s authoritarian President Bashar al-Assad in December 2024. Assad’s regime served as the backbone of the Axis of Resistance and the logistical bridge for the transport of ammunition from Iran to the military wings of Hezbollah and Hamas, operating as a vital tool for facilitating the key tenets of the Palestinian cause. The regime’s sudden collapse marks a momentous new chapter for the Middle East, highlighting Tehran’s weakened foothold on the region and the generated sense of urgency for resistance factions, who must now reassess their strategies in light of their miscalculation regarding the technological edge of their adversaries.
Being an opportunist and a capitalist driven figure, Trump may view the fall of Assad as a challenging yet compelling opportunity to exploit the fractures of the Axis in order to drive the financially suffocating war in Gaza to a halt. Given their history, Trump is aware that he remains an indispensable ally to Netanyahu – today, more than ever – as his disintegrating government continues to drastically lose support among its people and cabinet, leaving it unstable and fragile. Trump has already demonstrated the controlling power and leverage he has over Netanyahu by already advancing on a Gaza ceasefire and hostage deal, which has repeatedly failed under Biden’s administration.
Trump’s Middle East envoy, Steve Witkoff, held a meeting with Netanyahu on 11 January 2025, pressing him to make the necessary compromises to finalize a hostage deal before the January 20 presidential inauguration.
Iran has devoted its nation tirelessly to serving as the nucleus of the Axis of Resistance, committing itself towards a stern ideological alignment with the Palestinian cause whilst being the main financial and military patron to its allies in the region. However, the past year has tested its capabilities against its longstanding adversary which have been undeniably drained as it now grapples with mounting setbacks and substantial losses. Trump has capitalized on Iran’s weakened foothold in the region and its reduced ability to support Hezbollah and Hamas. Evidently, Trump is keen to further assert his influence by positioning himself as the president who ended the war that devastated the region, while also tarnishing the Democratic Party’s reputation and framing it with the shadow of a genocidal legacy.
As of now, the ceasefire has not been finalized. SET Advisory will release an updated analysis at a further date once more details become available.
The Gulf
Trump’s impact on the Gulf is difficult to speculate on – not simply because Trump’s foreign policy is generally difficult to predict – that much is already clear – but rather because of the increased autonomy that Trump’s ‘America First’ vision will likely afford its partners in the region. With regional responsibility offloaded to Gulf allies of the USA, pertaining especially to security, sustainability, trade and energy, these actors may be faced with new opportunities to cooperate more closely with China while reaping the benefits of a transactional relationship with their traditional Western ally.
Shift to Transactional Relationship
A second Trump administration could conceivably bring about an increasingly transactional relationship between the USA and its Gulf allies, and Trump will likely delegate the responsibility of safeguarding US interests to his most influential regional partners – Saudi Arabia and the United Arab Emirates. As Trump also shifts American priorities in the Gulf away from the human rights and democratic issues promoted by Obama, the defence and energy industries may stand to benefit from this increasingly transactional style of diplomacy.
With regards to defence, an increase in arms contracts between the US and its principal Gulf allies – namely Saudi Arabia and the UAE – would be the most convenient way for the Trump administration to confidently offload responsibility for regional security while ensuring the flow of Gulf oil and gas into global markets remains healthy and unthreatened by adversaries such as Iran.
Sustainability and Diversification
In 2023, the UAE hosted the largest COP meeting in the conference’s history. It concluded with a call on all governments to accelerate the transition away from fossil fuels. Today, the reality of a second Trump administration has muddied those waters and raised the question of how effectively Gulf states can reach their stated diversification goals with the example set by the incoming American government that promotes the doubling-down on local fossil fuel extraction for short term economic gain. After all, if the USA can “drill, baby, drill”, why shouldn’t anyone else? The world will be watching to judge how the various Gulf diversification programmes, such as Saudi Arabia’s Vision 2030 and Oman’s Vision 2040, will fare in the context of eroding coherence in global climate and energy goals.
The increase in regional autonomy awarded to the GCC by Trump’s transactional foreign policy may offer his Gulf allies a wider array of partners to choose from as they navigate their long-term energy and diversification goals. One potential strategy that GCC states may adopt is to pick and choose convenient deals and investment opportunities from the American and Chinese spheres of influence, averting a Cold War-esque dependence on a single centre of gravity.
In the event of a scaled-back American presence in the Gulf, regional leaders may increasingly look to China’s Belt & Road initiative for investment and assistance in their diversification goals. China has already begun investing in GCC-wide infrastructure with the aim of integrating the bloc into the wider region and facilitating overland trade alternatives between the Mediterranean and Arabian seas. The rising power also recently overtook the US as Saudi Arabia’s top crude oil export destination.
This freedom to shop around for investment partners, coupled with an increasing apathy towards issues of human rights and migrant labour, may accelerate the ambitious futuristic construction projects of Crown Prince Mohammed bin Salman’s Saudi Arabia. In turn, Western contractors, including engineering, consulting and investment firms, who are looking to get involved in Vision 2030 projects, must be increasingly aware of reputational risks when pursuing opportunities in an increasingly multipolar and decreasingly regulated business landscape.
This analysis was jointly prepared by Yara Mahdi, Senior Analyst at SET Advisory, and Patrick Newell, Analyst at SET Advisory.