Gulf oil producers invest billions in pipelines to bypass Strait of Hormuz amid rising tensions
Countries around the Persian Gulf are accelerating pipeline projects that could divert up to 7 million barrels per day of oil away from the Strait of Hormuz as the conflict with Iran intensifies.
Oil shipments through the Strait of Hormuz have fallen sharply since the conflict with Iran began, prompting Gulf states to fast-track pipeline projects that would route crude to Red Sea and Gulf of Oman ports. At least seven major pipelines are under construction or in planning, according to officials and industry analysts, aiming to reduce reliance on the narrow waterway that runs alongside Iran's coast.
Saudi Arabia’s East-West pipeline, built in the 1980s, already moves oil from the Abqaiq processing complex to the Red Sea port of Yanbu, while the United Arab Emirates is expanding capacity at Fujairah. Abu Dhabi’s state oil company is halfway through a $3 billion, 200-mile pipeline that could add more than 1.2 million barrels per day to Fujairah’s throughput, with completion expected around mid-2027.
Iraq is also pursuing alternatives, including a route from Basra to Turkey’s Ceyhan port and a branch to Syria’s Baniyas, which U.S. officials have described as a “critical energy corridor.” Discussions with Jordan on a Basra-to-Aqaba line are ongoing. Analysts at Goldman Sachs estimate that the combined projects could divert an additional 3.8 million barrels per day by the end of next year and up to 7.3 million barrels per day by 2028, potentially allowing about 60 % of the Gulf’s pre-war export volume to bypass the strait.
The new routes face security risks. Yemen’s Iran-backed Houthi rebels have attacked Saudi tankers in the Red Sea and previously struck a Saudi pipeline, underscoring the vulnerability of alternative corridors. The Saudi East-West pipeline itself was shut down by a Houthi drone strike in 2019. Moreover, the Suez Canal cannot accommodate the largest oil tankers, limiting the efficiency of some rerouted shipments.
"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.
While pipelines can mitigate some disruptions to crude flows, they do not address the parallel challenge to liquefied natural gas shipments, which also heavily depended on the strait before the conflict.