New pipelines may offset Hormuz oil disruption, but years of construction required
Analysts say alternative routes such as pipelines and upgraded export facilities could restore much of the oil flow lost from the Strait of Hormuz, but the projects will take several years and remain vulnerable to regional conflict.
U.S. gasoline prices have risen above $4 a gallon as the near-closure of the Strait of Hormuz cut roughly 20% of global oil supply, about 21 million barrels per day, according to the U.S. Energy Information Agency. In response, Gulf producers are advancing pipeline projects that would bypass the strait, though experts note the infrastructure will require years of construction and substantial investment.
Shipping traffic through the strait has fallen sharply, with an average of 13 vessels per day last week compared with more than 100 before the conflict, data from oil-tracking firm Kpler shows. Global crude prices are around $89 a barrel, up roughly 25% since February, while the average U.S. pump price sits at $4.06 per gallon, up from $2.98 before the war, according to AAA.
U.S. Energy Secretary Chris Wright said alternative routes have already helped replace much of the lost capacity. > "Thanks to the coordinated efforts of the U.S. military and our Gulf allies, the seven-day average for oil leaving the Strait of Hormuz is currently up to almost 9 million barrels per day," Wright posted on X. He added that combined with newly upgraded pipelines and export facilities, total regional flows average about 15 million barrels per day.
Saudi Arabia’s state oil company Aramco now relies on a domestic pipeline that moves up to 7 million barrels per day from the Persian Gulf to a Red Sea port, with plans to add 2 million barrels per day, Reuters reported. The United Arab Emirates has begun building a pipeline to the port of Fujairah that could double its exports to 3.6 million barrels per day by next year, according to the Institute for Energy Research. Jordan and Iraq are negotiating a pipeline capable of transporting 1 million barrels per day to a Red Sea outlet, while Kuwait is discussing similar projects with Saudi Arabia and other partners.
"You’ve already got some projects in the works. I don’t see any turning back. Nobody wants to get stung without a solution again," said Tom Seng, professor of energy finance at Texas Christian University.
University of Texas professor Hugh Daigle said viable pipeline paths exist but logistics present challenges. University of Houston petroleum-engineering professor Ramanan Krishnamoorti warned that replacing most of the pre-war flow could take up to five years, though expedited schedules might shorten that to two years, according to Seng and Daigle.
Analysts also caution that the new routes could be targeted by Iran or its proxies. Houthi militants in Yemen have claimed attacks on oil tankers in the Red Sea, and the Bab el-Mandeb Strait now sees about 40 ship crossings per day, surpassing traffic in the Hormuz corridor. > "The wild card is the Houthis. They could try to help the Iranians by disrupting any oil flow in the Red Sea," Seng said.
Despite the uncertainty, experts agree that Gulf nations have strategic incentives to develop alternative supply chains to avoid future disruptions. > "Regardless of short-term political outcomes, the Gulf nations have strategic incentives to think hard about avoiding this situation in the future," said Jeff Colgan, professor of political science at Brown University.