Before hostilities broke out with Iran, approximately 15 million barrels of Persian Gulf oil passed through the Strait of Hormuz every single day. Within the next few years, a significant portion of that oil could be flowing through entirely different routes.
As Iran continues to exert control over the strait and oil prices climb, nations throughout the Gulf region are preparing to invest billions of dollars in new pipeline infrastructure. These projects would allow them to redirect oil shipments to ports along the Red Sea, the Suez Canal, and the Gulf of Oman.
Government officials, oil companies, and industry analysts say at least seven major pipeline projects are either already under construction, in the planning phase, or being seriously considered.
Even alternative routes carry their own risks, as Iran-backed Houthi rebels in Yemen demonstrated this week by announcing a blockade targeting Saudi-linked vessels trying to pass through the Red Sea. Still, the conflict has served as a major wake-up call for Gulf oil producers, who are now determined to reduce their reliance on a shipping lane that runs along Iran’s coastline.
Some of the new routes will be longer and costlier to operate. Even so, depending so heavily on the Strait of Hormuz “is no longer a prudent long-term strategy,” according to Victoria Grabenwöger, a senior researcher at data and analysis firm Kpler.
The economic blow from the strait’s effective shutdown would have been far worse if not for a pipeline Saudi Arabia constructed in the 1980s, built specifically because of concerns that Tehran would disrupt shipping during the Iran-Iraq war.
That Saudi East-West pipeline moves oil across the country from a processing facility in Abqaiq to the city of Yanbu on the Red Sea coast, where it is loaded onto tankers heading either south toward the Arabian Sea or north toward the Suez Canal.
The United Arab Emirates, meanwhile, has been routing more of its oil to the port of Fujairah, located on the Gulf of Oman about 145 kilometers — roughly 85 miles — south of the Strait of Hormuz.
Together, those two pipelines had unused capacity of between 3.5 million and 5.5 million barrels per day before the war, according to the U.S. Energy Information Agency. Both are now operating near their maximum capacity.
Abu Dhabi’s state-owned oil company — Abu Dhabi being one of the UAE’s seven emirates — is fast-tracking construction of a new $3 billion pipeline stretching 300 kilometers, or about 200 miles, to Fujairah. Running parallel to an existing line, the new pipeline is designed to boost oil deliveries to Fujairah by more than 1.2 million barrels per day.
The project was already underway before the war began and is now roughly halfway complete, according to Kpler. The target completion date is early 2027, though Kpler analysts believe mid-2027 is more realistic, given that the port at Fujairah also needs to be expanded.
The aggressive timeline “has only become feasible against the backdrop of the Strait of Hormuz blockade,” said Grabenwöger of Kpler.
In Iraq, officials are accelerating plans to open up alternative export routes for oil fields in the southern region around Basra. Iraq’s dependence on the Strait of Hormuz has been so severe that the country has had to cut back on oil production.
The Iraqi government, which relies on oil revenues for roughly 90% of its income, has been working with U.S. companies on pipeline proposals. One plan would connect an oil terminal in Basra — which was exporting more than 3 million barrels daily before the war — to the port of Ceyhan in Turkey along the Mediterranean Sea.
A branch of that pipeline would extend to Baniyas, a Mediterranean port in Syria. Ultimately, as many as 2 million barrels per day could flow through to Baniyas, a route the U.S. State Department has described as “a critical energy corridor.”
Iraqi officials have also been in talks with Jordan about reviving long-discussed plans for a pipeline from Basra to the port of Aqaba, from which oil would be exported via the Red Sea or Suez Canal to Asia and other markets.
Taken together, analysts at investment bank Goldman Sachs estimate the new bypass projects could carry 3.8 million barrels per day by the end of next year, rising to 7.3 million barrels per day by the close of 2028. They project that roughly 60% of the Gulf’s total prewar exports of 23 million barrels per day would be shielded from any future Hormuz shutdown.
However, pipelines running from the Persian Gulf toward the Mediterranean move oil in the wrong direction for Asian nations that had depended on Hormuz shipments. Reaching those customers would require a far longer journey around the southern tip of Africa.
Oil routed from Saudi Arabia to the Red Sea also remains at risk from Houthi rebel attacks in Yemen. Those rebels have previously disrupted shipping at the Bab el-Mandeb Strait, the narrow waterway connecting the Red Sea to the Gulf of Aden.
Tankers departing from Yanbu could take the Suez Canal route, but the canal cannot handle the oil industry’s largest vessels, which carry up to 2 million barrels each and are typically the most economical option for long-distance transport.
Even pipelines located well away from Iran are not completely safe from attack by Iran’s paramilitary Revolutionary Guard or allied militant groups. The Saudi East-West pipeline itself was knocked offline by a Houthi drone strike back in May 2019.
While the Gulf’s energy sector works to reroute its oil supplies, an even more complicated and costly challenge remains unresolved: before the war, roughly one-fifth of the world’s liquefied natural gas — much of it originating from Qatar — also moved through the Strait of Hormuz.
