Local government pension schemes across the UK have invested nearly £3 billion in funds holding assets that have been hit, stranded, or placed in the direct line of fire during the ongoing war in the Middle East, according to an investigation. The money has been channelled through funds managed by firms such as BlackRock, the asset manager run by billionaire Larry Fink, which collects billions in fees for investing UK savers' money.
The conflict has put these investments at immediate risk, while long-term concerns persist over the value of fossil fuel assets as the world transitions to renewable energy. The Fujairah oil terminal in the UAE, a key export route bypassing the Strait of Hormuz handling about 1.7 million barrels per day, has come under repeated attack since the war began. Pension holders in Cambridgeshire, Dorset, and Leicestershire may be alarmed to discover that their savings are invested in it.
Councillor David Noland, a member of North Yorkshire’s pension fund committee, has been pushing for the fund to divest from coal, oil, and gas. He told the investigation he was “exceedingly worried” to learn of the findings, seeing the war as reinforcing his argument. Guy Prince, head of energy supply research at think tank Carbon Tracker, said: “It raises the question about whether long-term pension savings should depend on politically unstable regions and an uncertain future energy demand. Fossil fuels are financially risky now and their resilience is hugely in question.”
UK pension funds are invested in various infrastructure projects endangered by the war, including pipelines across the Arabian desert, gas tankers stuck behind the Strait of Hormuz, and a liquefied natural gas terminal in Bahrain. Some have taken direct hits, while others remain at risk of attack. The complex deals transfer risk from oil and gas companies to ordinary public-sector workers and retirees, with BlackRock often at the centre.
In 2020, BlackRock raised more than $5 billion (£3.7 billion) from pension providers and insurance companies, including Teesside’s local government pension scheme, to invest in energy and power assets. It then participated in a $15.5 billion deal to fund Saudi Aramco’s gas pipeline network for 20 years, which transports gas from behind the Strait of Hormuz across the desert for export. Iranian drones have targeted such infrastructure.
