Gulf oil producers plan billions in pipelines to bypass Strait of Hormuz

New pipeline routes will be longer and more costly, analysts warn

Before the war in Iran, roughly 15 million barrels of Persian Gulf oil moved each day through the Strait of Hormuz — a narrow passage that hugs Iran’s coast and has long served as the dominant export route for Gulf crude. Within a few years, much of that oil could take a different path.

Countries across the Gulf are now planning to spend billions of dollars on pipeline infrastructure designed to bypass the strait entirely, redirecting crude to ports along the Red Sea, the Suez Canal and the Gulf of Oman, according to government officials, oil companies and analysts. At least seven major projects are at various stages, from active construction to early planning discussions.

Iran’s ability to restrict transit through the strait has persisted during months of conflict, and oil prices have surged as a result. The disruption has exposed the risk of routing a significant share of global oil supply through a single chokepoint within reach of Iranian forces. Gulf producers, according to the AP’s David McHugh, are now determined to become less dependent on that transit point.

Victoria Grabenwöger, a senior researcher at the data and analysis firm Kpler, characterized the shift as a direct response to the war’s lessons. Relying so heavily on the Strait of Hormuz “is no longer a prudent long-term strategy,” Grabenwöger said.

The pipeline projects would reduce Gulf producers’ dependence on Hormuz, but they come with tradeoffs. Some alternative routes will take oil on longer and more expensive paths to market, raising transportation costs that could be passed through to global buyers.

The vulnerability of alternatives was underscored this week when Iran-backed Houthi rebels in Yemen imposed a stated blockade on Saudi-linked vessels attempting to transit the Red Sea. The action demonstrated that pipelines redirecting crude to Red Sea ports would still be exposed to regional security threats beyond Iran’s direct control.

The war has served as what the AP described as a “wake-up call” for Gulf oil producers, prompting a reconsideration of export infrastructure that had been built around the assumption of reliable Hormuz access. The pipeline push, even with its costs and remaining risks, reflects a judgment among producers that the geopolitical landscape has changed permanently.