Middle Eastern oil producers are significantly accelerating efforts to build alternative routes for oil exports, bypassing the Strait of Hormuz. This strategic shift involves spending tens of billions of dollars on pipelines and port expansions. The urgency for these projects has increased due to escalating tensions and the perceived necessity of reducing dependence on the Strait, which is considered a critical and vulnerable chokepoint for global oil trade. Experts like Ben Cahill from the Atlantic Council and Greg Priddy from the Center for the National Interest emphasize that while these pipelines are expensive and geopolitically complex, they are now seen as essential backup options, backed by sovereign wealth funds and investors.
The United Arab Emirates, in particular, is a key player in this initiative. The state-owned oil company of Abu Dhabi is fast-tracking construction of a $3 billion, 300-kilometer (200-mile) pipeline to Fujairah. This new pipeline, running parallel to an existing one, is designed to boost oil supply to Fujairah by over 1.2 million barrels per day. The project, which commenced before the recent geopolitical conflicts, is currently about halfway finished. Kpler analysts anticipate its completion by mid-2027, rather than the earlier target of early 2027, largely due to the need for expanding port facilities in Fujairah.
Collectively, these new projects, including those in Saudi Arabia and Iraq, could add substantial oil export capacity outside the Strait of Hormuz. Analysts from Goldman Sachs project that an additional 3.8 million barrels of oil per day could bypass Hormuz by the end of next year, with that figure reaching 7.3 million barrels per day by the close of 2028. This expansion would enable approximately 60% of the Gulf's pre-war total exports of 23 million barrels per day to bypass the Strait if necessary. This highlights a durable trend among Gulf states to secure their energy exports against potential disruptions, moving oil to ports along the Red Sea and the Gulf of Oman, with countries like Saudi Arabia and the UAE positioned to benefit the most, while Kuwait and Bahrain are likely to face disadvantages.
