Gulf producers have reduced U.S. industrial import share to roughly 8%, under two-thirds of its level a decade ago. This decline undermines the historical 'machinery moat' that compelled producers to hold dollars for capital expenditures on extraction and construction equipment.

Regional conflict and strategic shifts are prompting Gulf states to diversify military spending beyond U.S. defense primes. A move toward non-U.S. procurement further erodes a major pillar supporting sustained dollar reserves in the region.

With petrodollar recycling into Treasuries potentially curbed by revenue flows into other currencies, equipment exporters could face weaker orders. Companies like Caterpillar may encounter pricing pressure and slower sales growth as Gulf customers shift purchases and settlements away from the dollar.