Middle East Allies Accelerate Pipeline Projects to Sidestep Strait of Hormuz Chokepoint

Persian Gulf oil producers are rapidly advancing plans for new pipelines and port infrastructure aimed at bypassing the Strait of Hormuz, a critical maritime chokepoint through which approximately 20% of the world's oil once flowed. These initiatives are spurred by repeated attacks on shipping and disruptions to traffic in the strait, which have amplified Tehran's leverage.

Several projects are already in various stages of development. The United Arab Emirates (UAE) is significantly advancing its West-East Pipeline project, which is now about 50% complete. Crown Prince Sheikh Khaled bin Mohamed bin Zayed has set a target completion date of 2027 for the 252-mile pipeline. Once operational, it is expected to double the UAE's overland oil transport capacity to 3.6 million barrels per day, running parallel to the existing Fujairah pipeline. Sultan Al Jaber, head of the Abu Dhabi National Oil Company, stated that the current conflict underscores the UAE's long-term strategy to invest in infrastructure that circumvents the Strait of Hormuz, emphasizing the need to diversify global energy supply routes.

In Iraq, a more ambitious project, the 435-mile Basra-Haditha oil pipeline, is under construction. This pipeline is intended to connect Iraq's oil fields with Jordan, Syria, and Turkey, with a projected capacity of 2.5 million barrels per day. Iraqi Prime Minister Mohammed Shia al-Sudani has highlighted the pipeline as a measure to safeguard the nation's exports from regional instability. Construction began in early May, with an allocation of approximately $1.5 billion from the country's oil ministry. The project received initial approval in 2024, though a firm completion timeline has not yet been established.

Saudi Arabia is also reportedly exploring options to expand the capacity of its crude oil pipeline to the Red Sea. Preliminary discussions with neighboring countries are underway for a potential expansion that could increase capacity to 9 million barrels per day.

Beyond pipelines, the UAE is planning the development of a new port and container terminal on the Arabian Sea coast. This facility is intended to facilitate the import of goods into the region without traversing the Strait of Hormuz, potentially rivaling the country's Jebel Ali hub and further diminishing reliance on the strait.

Goldman Sachs analysts project that these pipeline initiatives could divert up to 45% of pre-conflict Persian Gulf oil exports by the end of 2027. The bank estimates that by the end of 2028, output bypassing the Strait of Hormuz could reach 7.3 million barrels per day, making approximately 60% of the Gulf's oil exports resilient oil exports "strait-proof." The swift execution of such pipeline projects is noted as a characteristic of the Middle East region.

Despite these efforts to mitigate disruptions, a significant volume of oil, estimated between 7 million and 9 million barrels per day, will likely remain dependent on the Strait of Hormuz. Furthermore, the effectiveness of some pipeline routes could be impacted by stability in the Red Sea, which has faced recent threats from Houthi rebels in Yemen.