Before the war in Iran, roughly 15 million barrels of Persian Gulf oil were shipped each day through the Strait of Hormuz. Within a few years, much of that oil could bypass the strait.
As Iran’s chokehold over the strait drags on and oil prices surge, countries across the Gulf are planning to spend billions of dollars to build pipelines enabling them to redirect more supplies to ports along the Red Sea and the Gulf of Oman.
At least seven major pipeline projects are under construction, in the planning stage or being discussed as possibilities, according to government officials, oil companies and analysts. The war has been a wake-up call for Gulf oil producers, who are determined to become less dependent on a transit point that hugs Iran’s coast.
But alternatives to Hormuz are also vulnerable to disruption. Yemen’s Iran-backed Houthi rebels said early Thursday they had attacked two Saudi oil tankers in the Red Sea, a key alternative route to the strait for Saudi oil exports.
Some alternative routes will take the oil on longer and more expensive paths to market. Regardless, producers have realized that relying so heavily on the Strait of Hormuz “is no longer a prudent long-term strategy,” said Victoria Grabenwöger, senior research analyst at data firm Kpler.
The effective shutdown of the Strait of Hormuz would have been an even greater shock to the world economy were it not for a pipeline Saudi Arabia built in the 1980s amid fears that Tehran would disrupt shipping through the strait during the Iran-Iraq war.
The Saudis’ East-West pipeline carries oil across the desert nation from a processing facility in Abqaiq to the city of Yanbu on the Red Sea coast. Once there, it is loaded onto tankers that head either south to the Arabian Sea or north to the Suez Canal.
The United Arab Emirates has been sending more oil to the port of Fujairah, which abuts the Gulf of Oman, about 145 kilometres (90 miles) south of Hormuz.
Combined, the two pipelines had spare capacity of about 3.5 million to 5.5 million barrels per day before the war began, according to the US Energy Information Administration. The two pipelines are now running near full capacity.
The state-owned oil company of Abu Dhabi, one of the UAE’s seven emirates, is accelerating construction of a $3 billion, 300-kilometer (200-mile) pipeline to Fujairah. That pipeline, which will run parallel to an existing one, aims to increase oil supplied to Fujairah by more than 1.2 million barrels a day.
