Gulf Oil Exporters Invest Billions in Bypass Routes
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Gulf Oil Exporters Invest Billions in Bypass Routes
- Gulf oil producers are investing billions of dollars in new pipelines and export infrastructure to reduce their reliance on the Strait of Hormuz, a critical chokepoint for global oil trade.
- Saudi Aramco and the Abu Dhabi National Oil Company (ADNOC) are among the key players constructing these alternative routes, with ADNOC's 1.5 million-barrel-per-day West-East Pipeline expected to be operational by early 2027.
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The Strait of Hormuz, situated between Oman and Iran, is a vital waterway connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea. Historically, approximately 20% of the world’s liquefied natural gas and 25% of seaborne oil trade passed through the strait annually. In 2024, oil flow through the Strait averaged 20 million barrels per day, accounting for about 20% of global petroleum liquids consumption.
Recent geopolitical tensions and disruptions, including a blockade by Iran since February 28, 2026, have highlighted the vulnerability of this critical chokepoint. This has led Gulf oil exporters to accelerate plans for alternative export routes. Saudi Arabia, the largest exporter through the Strait of Hormuz, accounting for nearly 40% of oil exports in 2024, has heavily relied on its East-West Pipeline (also known as Petroline). This pipeline can transport oil from the eastern oil fields to the Red Sea port of Yanbu, bypassing the Strait of Hormuz. While the East-West Pipeline has a capacity of approximately 7 million barrels per day, about 2 million barrels are used by refineries in western Saudi Arabia, leaving around 5 million barrels per day for export. The pipeline recently restarted operations after being shut down due to drone strikes, and Saudi Aramco is working to restore its full capacity.
The United Arab Emirates (UAE) is also actively developing bypass routes, with ADNOC expanding crude export capacity to Fujairah, a port on the Gulf of Oman. This existing pipeline can carry about 1.8 million barrels per day, and ADNOC is constructing a second bypass route, the 1.5 million-barrel-per-day West-East Pipeline, expected to be in service by early 2027. Iraq is also accelerating plans for alternative export routes, including pipeline projects with U.S. companies and discussions with Jordan for a pipeline to Aqaba. These new projects, taken together, could add an estimated 3.8 million barrels of oil per day by the end of next year and 7.3 million barrels per day by the end of 2028, potentially allowing 60% of the Gulf’s pre-war exports to bypass the Strait of Hormuz.