Vessels within the Strait of Hormuz close to the seaside of Bandar Abbas, Iran, June 11, 2026.
Amirhosein Khorgooi/isna | By way of Reuters
President Donald Trump’s risk to impose a 20% price on cargo passing via the Strait of Hormuz and renewed U.S.-Iran tensions have revived the Gulf’s pressing seek for oil export alternate options.
From Saudi Arabia’s East-West pipeline to the United Arab Emirates’ export infrastructure outdoors the strait, Gulf producers are more and more counting on various routes to maintain crude shifting as assaults and transport disruptions expose the dangers of relying on Hormuz.
The United Arab Emirates is reportedly seeking to construct a brand new port and container terminal on its east coast, in a bid to bypass the Strait of Hormuz and scale back dependence on its Jebel Ali hub — the premier logistics powerhouse within the Center East.
Ahmed bin Sulayem, chief government of the Dubai Multi Commodities Centre, mentioned experiences of the UAE seeking to construct a brand new port and terminal outdoors the strait signify each an “instant motion” however “additionally a medium- and long-term plan.”
“Till situations within the Strait of Hormuz are safer, as of now, I do not imagine there can be a lot give attention to transport traces going there,” bin Sulayem informed CNBC’s “Squawk Field Asia” on Tuesday.
The most recent disaster has proven each the worth and the bounds of these alternate options. Saudi Arabia has been diverting roughly 4 million barrels a day via its East-West pipeline, based on Andy Lipow, president of Lipow Oil Associates.
Saudi Arabia’s East-West pipeline community, or Petroline, is a roughly 750-mile system that transports crude throughout Saudi Arabia, connecting Abqaiq on the oil-rich kingdom’s japanese Gulf coast to the port of Yanbu on the Purple Sea. The pipeline is estimated to have a complete design capability of seven million barrels per day, following some latest expansions.
Riyadh has been diverting about 4 million barrels a day of crude oil from their east-west pipeline over to Yanbu, loading tankers, lots of that are going out the Purple Sea, information supplied by Lipow confirmed.
Maps4Media processed and enhanced Sentinal-2 satellite tv for pc imagery exhibits a broad view of the Strait of Hormuz between southern Iran and Oman’s Musandam Peninsula, together with surrounding islands, coastal terrain, and turquoise shallow-water zones on the entrance to the Persian Gulf.
Maps4media | Getty Pictures Information | Getty Pictures
Bob McNally, president of Rapidan Vitality Group, described Saudi Arabia’s capacity to maneuver extra crude via the route as a serious success.
“What actual grasp stroke was Saudi Arabia having the ability to put all that additional oil via the Yanbu pipeline, and it seems to be like UAE, with the assistance of the U.S. army, is getting again to pre-war ranges. Actually fairly a optimistic shock,” he mentioned on Monday.
But bypassing Hormuz doesn’t take away geopolitical threat a lot as shift it elsewhere.
Higher bargaining energy
Tankers loading at Yanbu should journey via the Purple Sea and cross the Bab el-Mandeb Strait, the place Houthi assaults may threaten one other key maritime hall. Lipow mentioned any try and cease these vessels may take away a number of million extra barrels a day from the market.
The UAE has additionally been utilizing tankers to shuttle crude from contained in the Strait of Hormuz to waters outdoors the strait, the place it may be transferred to bigger ships for supply to Asia, analysts mentioned.
“We do have the United Arab Emirates who’ve chartered their very own tankers to shuttle oil from inside the Strait to outdoors of the Strait, the place they’d lighter that materials to different vessels to make the voyage into Asia so as to primary preserve UAE gross sales, however quantity two, to get oil into the market to those nations that want it,” Lipow mentioned.
Carole Nakhle, CEO of Crystol Vitality, mentioned that the UAE has moved sooner than lots of its neighbors to develop alternate options, with implications that reach past power safety.
“Everyone is in search of an enduring answer, however the UAE has been sooner than many nations within the area when it comes to asserting alternate options to the Strait of Hormuz,” she famous on Tuesday.
“The second they scale back that form of publicity to the Strait of Hormuz, the extra bargaining energy they may have in any potential take care of the Iranians, and that by itself goes to deflate among the Iranians’ energy and affect within the area.”
What about different Gulf states?
Nonetheless, the Gulf is a good distance from lowering the Strait of Hormuz to a secondary route. Kuwait, Iraq and Qatar retain heavy publicity to the waterway, whereas various pipelines can not take in all of the crude and liquefied pure gasoline that might be stranded in a chronic closure.
The Worldwide Vitality Company mentioned Saudi Arabia and the UAE are the one Gulf producers with operational crude pipelines able to bypassing the Strait of Hormuz, with an estimated 3.5 million to five.5 million barrels a day of accessible capability.
Different regional exporters, together with Iraq, Kuwait, Qatar, Bahrain and Iran, depend on the waterway for the overwhelming majority of their oil shipments, underscoring the bounds of present alternate options.
Lipow mentioned Saudi Arabia, Kuwait and Iraq may ultimately be pressured to reverse latest manufacturing will increase if storage fills and empty tankers can not attain export terminals.
Constructing ample alternate options may even take time. Adam Posen, president of the Peterson Institute for Worldwide Economics, mentioned it may take 18 to 24 months for nations to develop sufficient pipelines, transport routes and different workarounds to cut back reliance on the Strait of Hormuz.
