U.S.-Israeli conflict with Iran tests solar supply

From the magazine

The Middle East remains a major destination for China’s module exports and an increasingly important market for new photovoltaic manufacturing investment. Recent clashes have so far had limited impact on Chinese downstream module and cell trading, as the situation is still evolving and broader implications for the entire supply chain remain uncertain.

China’s solar shipments to the Middle East in 2025 consisted mainly of cells and modules, according to global think tank Ember, totaling 1.2 GW and 25.9 GW, respectively, while wafer shipments were low at 10 MW.

The clearest near-term effect has been on container shipping, the main transport route for solar products into the region. Near-term delivery schedules have become less predictable, increasing the risk of rerouting and adding pressure on logistics. Some cargoes originally intended for the Middle East have been redirected to other markets, including Southeast Asia and South Asia, as exporters reassess delivery risks.

For now, deliveries to the Middle East appear to be delayed rather than canceled. Several solar projects in Saudi Arabia, Oman and the United Arab Emirates are still set to come online this year, with module supply already allocated. However, some near-term shipments may need to be rerouted and could face booking restrictions or conflict-related surcharges depending on how the situation develops.

To reduce shipping risks, more cargo is being routed around the Cape of Good Hope, lowering reliance on the Suez Canal and Red Sea corridor. While this has helped maintain supply flows, the longer voyage times have tied up vessel capacity, making schedules less predictable and pushing up shipping costs.

War-risk terms for Gulf-adjacent voyages have tightened as underwriters reassess exposure, which could raise shipping costs into the region if tensions continue. In some cases, standard war-risk cover is being withdrawn, with reinstatement available only through higher-cost buyback arrangements and reduced liability limits.

Despite the logistics uncertainty, module pricing has so far seen little impact, as Middle Eastern buyers typically secure supply one to two years ahead of delivery. The longer contracting cycle has insulated pricing discussions from recent spot volatility, making buyers more likely to delay new procurement rather than revisit existing agreements.

OPIS assessed the FOB China forward curve price for the first quarter of 2027 loading at $0.125/Wp as of March 10, with indications ranging between $0.120/Wp and $0.130/Wp.

Investment impact

According to market sources and company disclosures, at least 15 photovoltaic manufacturing projects have been announced or implemented across the Middle East since 2023. These manufacturing projects span the full value chain, from polysilicon to wafers, cells and modules, and are located in markets including the UAE, Saudi Arabia, Oman and Egypt.

One newly commissioned polysilicon project in the region (see pp. 62-64) had been scheduled to begin trial deliveries in March, with initial customer feedback expected to guide subsequent production adjustments and price negotiations. However, that process could face delays if logistics conditions worsen.

For now, immediate operational impact appears limited. Newly started plants are still in the trial stage, where delivery schedules tend to be more flexible and some producers may also hold sufficient raw material inventory to absorb short-term disruption. The main risk lies in a prolonged disruption scenario, where extended logistics constraints could delay raw material purchases, raise freight costs and add to price volatility.

In the long-term, the greater risk may lie with projects still under construction or at the planning stage. Prolonged disruption could slow implementation times and weigh on investor confidence, especially for projects still seeking funding. Some wafer and cell projects in the region are currently understood to be at a sensitive fundraising stage, leaving them more exposed to uncertainty.

Geopolitical tensions alone are unlikely to alter the region’s long-term solar manufacturing trajectory, as demand growth in the photovoltaic sector remains the underlying driver. At the same time, firmer conventional energy prices are having a mixed effect on the solar sector. While they raise fuel and freight costs, they also strengthen the relative economics of solar projects and support project returns.

The near-term impact appears manageable, but the longer-term outlook will depend on whether the conflict leads to more persistent concerns over regional stability, logistics and energy security.

About the author

Brian Ng is a senior analyst with the APAC editorial team at OPIS, a Dow Jones Company. He covers market pricing, news analysis, policy developments and research across the solar supply chain, with a focus on Asia’s downstream segments, including solar cells and modules.