As the conflict involving the United States and Israel against Iran intensifies into its fourth week, the repercussions extend beyond immediate military concerns to deeply impact global oil and gas markets. The strategic Strait of Hormuz, crucial for transporting a significant portion of the world’s oil, is facing substantial disruptions, prompting nations in the Middle East, including Saudi Arabia and the UAE, to innovate and explore alternative energy export routes to mitigate potential crises and secure energy supplies for global consumers.
As the United States-Israeli conflict with Iran advances into its fourth week, significant pressure continues to mount on global oil and gas markets. The ongoing hostilities have severely disrupted shipping traffic through the Strait of Hormuz, a crucial channel through which approximately 20% of the world’s oil and gas is transported, with 20 million barrels of oil shipped daily. As nations assess their energy security in this volatile environment, several Middle Eastern countries are actively seeking alternative routes to sustain their energy exports and stabilize global supply.
The situation in the Strait of Hormuz has escalated dramatically since early March, when Ebrahim Jabari, an advisor to the commander of Iran’s Islamic Revolutionary Guard Corps (IRGC), announced that the strait was effectively “closed” to certain vessels. According to Iranian officials, while not entirely shut, access has become highly restricted, with ships requiring Tehran’s approval for passage, leading to a significant decline in maritime traffic. In the past weeks, the number of vessels navigating the strait plummeted by over 95%, leading to a logjam for approximately 2,000 ships on either side of the waterway. Nations are scrambling to negotiate safe passage deals with Iran, with some, predominantly vessels from India, Pakistan, and China, receiving clearance.
Amidst this backdrop, Malaysia’s Prime Minister expressed gratitude towards Tehran for facilitating early transit permissions for Malaysian vessels. The urgency of securing alternative oil routes has brought the focus to several key pipelines in the region. One notable option is the East-West Pipeline in Saudi Arabia, also known as the Petroline, which spans 1,200 kilometers and connects key oil processing centers to the Red Sea. While its capacity to transport up to 7 million barrels per day is substantial, it cannot completely offset the closure of the Strait of Hormuz.
Saudi oil giant Aramco has significantly increased its throughput via this pipeline since the start of hostilities, more than tripling flows to an average of 2.9 million barrels per day. However, the continued risks from Houthi attacks in the Yemeni conflict pose an ongoing threat to this initiative. Other potential alternatives include the Abu Dhabi Crude Oil Pipeline, which runs from Habshan to Fujairah and has seen its output rise recently, and the Iraq-Türkiye Crude Oil Pipeline, which links Iraq’s oil fields to the Mediterranean but is currently underutilized.
While these pipelines represent viable alternatives, they face their own challenges. Collectively, they can only transport around 9 million barrels per day, far less than the roughly 20 million barrels passing through the Strait of Hormuz pre-crisis. Moreover, their land-based nature exposes them to the risks of missile attacks in the ongoing conflict, complicating energy security further. The prospect of transporting oil via truck remains an option, but it is prohibitively expensive and inefficient, making it unfeasible for meeting larger global demands.
The shifting landscape of energy transport in the Middle East underscores the resilience and adaptability of nations within the region, who are actively working to ensure continuity in energy supplies even in the face of geopolitical turmoil.
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