Before the conflict in Iran, approximately 15 million barrels of oil from the Persian Gulf were transported daily through the Strait of Hormuz. Now, the situation is changing as many countries in the Gulf region are planning to invest significant resources into building pipelines. These pipelines aim to divert oil shipments to ports on the Red Sea, the Gulf of Oman, and the Mediterranean.
Currently, seven major pipeline projects are either under construction, being planned, or discussed. This shift reflects a strong desire among Gulf oil producers to reduce dependency on the Strait of Hormuz due to tensions with Iran. However, alternative routes also have their vulnerabilities, demonstrated when Yemen’s Houthi rebels attacked two Saudi oil tankers in the Red Sea.
Despite some longer and more costly alternative routes, there is a consensus among producers that reliance on the Strait of Hormuz is no longer a sustainable strategy. The Red Sea and the Gulf of Oman have gained strategic importance as vital alternatives. Without these alternatives, a shutdown of the Strait of Hormuz could disrupt the global economy, echoing the fears during the Iran-Iraq war in the 1980s. In fact, the Saudis built an East-West pipeline during that period to mitigate such risks.
This pipeline transports oil across Saudi Arabia, from Abqaiq to the Red Sea port of Yanbu. Oil is then shipped southward to the Arabian Sea or northward to the Suez Canal. The United Arab Emirates (UAE) is also increasing oil exports via the port of Fujairah, adjacent to the Gulf of Oman. Before the war, spare capacity in these pipelines ranged from 3.5 million to 5.5 million barrels per day, according to the U.S. Energy Information Administration, but they now operate at nearly full capacity.
Abu Dhabi’s state-owned oil company is accelerating the development of a $3 billion, 300-kilometer pipeline to Fujairah. This pipeline is expected to increase oil supply by more than 1.2 million barrels a day and is projected for completion by mid-2027, subject to port expansions at Fujairah.
Efforts to build further pipeline connections to Turkey and Syria are also underway. Iraq plans to reduce its high dependence on the Strait of Hormuz and expand alternative export routes from its southern oil fields. The Iraqi government is actively pursuing pipeline projects with international companies, aiming to direct oil from Basra to Turkey’s Mediterranean port in Ceyhan and Syria’s port of Baniyas. Another pipeline proposal involves transporting oil from Basra to Aqaba, Jordan, for exports via the Red Sea or Suez Canal.
By bypassing the Strait of Hormuz, these new pipelines could potentially channel an additional 3.8 million barrels daily by the end of next year and 7.3 million barrels daily by late 2028. This diversification would allow 60% of pre-war exports to avoid Hormuz if needed. Despite these strides, challenges remain, including vulnerability to rebel attacks, like those carried out by Houthi rebels in places such as the Bab el-Mandeb Strait.
Furthermore, shipping oil through the Suez Canal poses limitations due to its incapacity to accommodate the largest oil tankers. Pipelines, while helpful, are also susceptible to disruptions, as evidenced by a Houthi drone strike on the Saudi East-West pipeline in 2019. These pipelines will not resolve disruptions in liquefied natural gas (LNG) supplies, which heavily rely on maritime routes.