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 terrorists 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 Red Sea and Gulf of Oman have become vital alternatives to Hormuz
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 kilometers (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 U.S. Energy Information Administration. The two pipelines are now running near full capacity.
More oil could begin flowing through a UAE port by next year
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.
The project, which started before the war, is now reportedly about halfway completed, according to Kpler. The pipeline is intended to be completed by early 2027, but Kpler says mid-2027 is more likely given the need to expand the port at Fujairah.
The ambitious timeline “has only become feasible against the backdrop of the Strait of Hormuz blockade,” Kpler's Grabenwöger said.
Plans to pipe more oil to Turkey and Syria will take longer
In Iraq, officials are ramping up plans to develop alternative export routes for southern oil fields around Basra. Iraq is so dependent on the Strait of Hormuz that it has had to scale back production.
The Iraqi government, which gets some 90% of its revenues from oil sales, has been pursuing pipeline projects with U.S. companies. One would take supplies from an oil terminal in Basra — through which more than 3 million barrels were exported daily before the war — to the port of Ceyhan in Turkey, along the Mediterranean Sea.
That pipeline would also have a branch extending to the Mediterranean port of Baniyas in Syria. Some 2 million barrels a day of oil could ultimately flow through the pipeline to Baniyas, which the U.S. State Department has called “a critical energy corridor.”
Iraqi officials have also held discussions with Jordan on advancing long-discussed plans for a pipeline that would carry oil from Basra to Aqaba. From there it would be exported via the Red Sea or the Suez Canal to Asia and beyond.
