Gulf Producers Accelerate Costly Pipelines to Bypass Strait of Hormuz

Nearly five months after conflict beginning Feb. 28 severely disrupted commercial traffic through the Strait of Hormuz, Gulf oil producers are accelerating costly pipelines and other export routes to move crude around a chokepoint that normally carries about one-fifth of the world’s seaborne oil.

Before the war, the strait handled roughly 18 million to 20 million barrels a day of crude, condensate and petroleum products, as well as about one-fifth of global liquefied natural gas, according to the International Energy Agency and figures cited by The Associated Press. The IEA said the conflict has “significantly impeded energy trade flows through the Strait of Hormuz.”

The response is moving beyond contingency planning and into major capital spending. The AP reported July 23 that Gulf producers are accelerating plans and investment to reroute oil shipments around Hormuz because the conflict has disrupted shipping. AP reported that at least seven large pipeline projects are now being built, planned or discussed to bypass the strait.

The clearest example is in the United Arab Emirates. AP reported that Abu Dhabi National Oil Co., or ADNOC, is accelerating a new West-East pipeline of about 300 kilometers, or 200 miles, at a cost of about $3 billion. The line will run parallel to the existing Habshan-Fujairah pipeline and is intended to increase oil supplied to Fujairah, the UAE export hub outside the strait, by more than 1.2 million barrels a day. AP said the project began before the war and is about halfway complete.

The timeline remains fluid. AP reported that ADNOC and industry sources had targeted early 2027 for completion, while analytics firm Kpler expects mid-2027 is more likely. The gap underscores both the urgency of the project and the difficulty of building new export capacity on a compressed schedule.

Saudi Arabia already has an important fallback route. AP reported that the kingdom’s East-West pipeline, also known as Petroline and originally built in the 1980s to bypass Hormuz, is being used heavily to move crude from Abqaiq to the Red Sea port of Yanbu. That has made Yanbu, like Fujairah, central to the region’s effort to keep exports moving without relying on the Gulf’s narrowest passage.

Iraq is also reviving long-discussed alternatives for its southern Basra oil exports. AP reported that Baghdad is accelerating export discussions and projects including renewed pipeline proposals to Turkey’s Mediterranean terminal at Ceyhan, a possible branch to Syria’s Baniyas and talks with Jordan on the Basra-Aqaba route. AP cited about 3 million barrels a day of prewar Basra exports as the backdrop for those efforts.

Taken together, the projects show how quickly a shipping disruption can reshape infrastructure planning. AP, citing Goldman Sachs analysts, said bypass projects already under way or under discussion could add 3.8 million barrels a day by the end of 2027 and 7.3 million barrels a day by the end of 2028. Those are analyst estimates, not established capacity, and they would still leave a large gap compared with the volumes that normally moved through Hormuz before the war.

The turn to pipelines also has clear limits. AP noted that land routes are slower and costlier than normal tanker movements, and they are not immune to the same regional security risks they are meant to reduce. AP cited Houthi attacks on Red Sea shipping and the 2019 Houthi drone strikes that shut parts of Saudi Arabia’s East-West pipeline.

The scale of the disruption is already evident in the emergency response. The IEA said member countries agreed on March 11 to its largest-ever coordinated release of emergency oil stocks, making 400 million barrels available to the market, including about 172 million barrels from the U.S. Strategic Petroleum Reserve. That stock release may help cushion supply, but the infrastructure build-out shows Gulf exporters are preparing for a longer period in which relying on Hormuz alone is no longer enough.