Under the sudden change in the Middle East situation: Realistic impacts and pattern reshaping of foreign trade in large equipment such as rotary drilling rigs

    Since late February 2026, the geopolitical crisis in the Middle East has escalated abruptly. Israel has infiltrated and taken control of almost all traffic cameras in Tehran through cyber means, and after years of constructing behavioral profiles of Iran's Supreme Leader's security team, it finally provided core intelligence support for precision strike operations. On March 4th, German Defense Minister Pistorius made a clear statement in the Bundestag, which clearly defined Europe's position in this conflict - Germany will not participate in the war between the US and Israel against Iran, and will only maintain regional stability through diplomatic mediation and limited defense cooperation. This crisis, which combines attributes of cyber warfare and geopolitical games, is profoundly affecting the global foreign trade pattern of large engineering equipment such as rotary drilling rigs through three main lines: logistics, sanctions, and market structure, especially having a direct and lasting impact on the Asia-Europe supply chain and the Middle East market.

    As the core equipment for pile foundation engineering, rotary drilling rigs rely on stable international logistics channels, clear trade rules, and sustainable infrastructure demand for their foreign trade. However, the current situation has precisely created gaps in these three core elements. The first to suffer is the collapse of the logistics system and the loss of cost control. The Strait of Hormuz, as the throat of global energy and Asia-Europe trade, has been under tension, forcing giants such as Mediterranean Shipping to issue notices of suspension or rerouting. Cargo ships bound for the Middle East need to reroute to the Cape of Good Hope in Africa, directly increasing the voyage by 10 to 14 days. For large equipment such as rotary drilling rigs, which are ultra-wide and ultra-heavy, the rise in logistics costs is particularly alarming: basic sea freight has soared from around $2,200 to over $7,000, and with the addition of war surcharges and rerouting surcharges ranging from $1,500 to $3,000, the transportation cost of a single equipment has more than tripled compared to before the conflict. What is even more severe is that war risk insurance rates have soared by 300% to 500%, and some insurance companies have even suspended underwriting for Middle East shipping routes. If high-value equipment such as rotary drilling rigs are stranded or damaged during transportation, companies will face huge losses without insurance coverage.

    Germany's "non-participation in the war" stance, while preventing Europe from being fully drawn into the conflict, has failed to alleviate the compliance and settlement difficulties in foreign trade of large-scale equipment. The United States continues to intensify secondary sanctions against Iran, and any enterprise having trade dealings with Iran may be included in the "Specially Designated Nationals List", which makes European enterprises, including those from Germany, more cautious about the Iranian market. Foreign trade transactions of rotary drilling rigs often involve large-scale fund settlements and long-term after-sales cooperation. Due to fears of sanctions risks, European enterprises have successively scaled back their business layouts in Iran. Even though German enterprises have technological advantages, they dare not rashly participate in infrastructure projects in Iran. This "western retreat" trend has directly led to changes in the supply structure of Iran's rotary drilling rig market: the high-value-added market share previously occupied by European and American brands with high-end technologies has become a vacuum, while Chinese enterprises, relying on years of market cultivation and policy coordination, are becoming the main fillers of this gap. Data shows that the market share of Chinese engineering machinery in Iran's medium and low-end equipment market has exceeded 90%, and the market share of mining machinery has even jumped from 28% in 2020 to 57% in 2024. As a core infrastructure equipment, rotary drilling rigs have naturally caught the express train of this substitution effect.

    However, this substitution growth is not without obstacles. The demand fluctuations and performance risks brought about by the turbulent situation have cast a shadow over the foreign trade of rotary drilling rigs. Iran's infrastructure projects are highly dependent on government finances and international investment. After the outbreak of the conflict, many large-scale projects such as the expansion of the Tehran Metro and intercity railways were forced to suspend due to safety risks, and the originally signed purchase orders for rotary drilling rigs are facing the risk of delay or even cancellation. Industry sources indicate that some Chinese enterprises have encountered situations where Iranian customers lost contact and the pre-ordered rotary drilling rigs could not be delivered, and even Iranian customized models to be resold have appeared in the second-hand equipment market. At the same time, the exchange rate of Iran's local currency fluctuates violently, and the probability of delayed payment, breach of contract and abandonment of goods has increased significantly. Even if enterprises get orders, they may face difficulties in collecting payments. For enterprises planning to enter the Middle East market through foreign trade of rotary drilling rigs, such uncertainties have forced them to adjust their strategies: either suspend new orders in Iran, or require customers to pay a higher proportion of advance payment, along with low-risk settlement methods such as letters of credit.