Gulf countries are fast-tracking plans to expand and build new oil and gas pipeline networks to bypass the strategically critical Strait of Hormuz, as geopolitical risks linked to the ongoing U.S.-Iran conflict intensify. The developments, first reported by the Financial Times, signal a structural shift in regional energy logistics aimed at reducing dependence on one of the world’s most vulnerable chokepoints.
Key developments
- Gulf states exploring new pipeline corridors bypassing Hormuz
- Saudi Arabia’s East-West pipeline seen as a model
- Replication costs estimated at $5–20 billion
- Focus shifting toward integrated regional energy networks
- Moves driven by heightened war risks and supply disruptions
Saudi model gains strategic importance
At the centre of current planning is Saudi Arabia’s 1,200-km East-West pipeline, originally built in the 1980s following the Iran-Iraq War tanker disruptions. The pipeline connects oil fields in the east to the Red Sea port of Yanbu, allowing exports to bypass the Strait of Hormuz entirely.
According to Amin Nasser, the pipeline is currently operating at full capacity of around 7 million barrels per day, highlighting its critical role in maintaining export continuity during crises. Saudi Arabia is now evaluating further expansion of this capacity and exploring additional routes to support its production of over 10 million barrels per day.
Rising costs and logistical barriers
Industry executives estimate that replicating such infrastructure today would cost at least $5 billion, with more complex multi-country routes potentially reaching $15–20 billion. Challenges include:
- Harsh terrain, including desert and basalt rock formations
- Security risks such as unexploded ordnance and militant activity
- Political coordination across multiple jurisdictions
Alternative routes under consideration include pipelines from Iraq through Jordan or Syria, as well as southern corridors through Oman. However, these options face both geopolitical uncertainty and environmental constraints.
Shift toward regional energy networks
Experts are increasingly advocating for a “network-based approach” rather than standalone pipelines. This would involve integrating oil, gas, rail, and even hydrogen infrastructure into a broader regional grid to enhance resilience.
One proposal gaining traction is the India-Middle East-Europe Economic Corridor, a multi-nation initiative aimed at linking India with Europe via the Gulf and the Mediterranean. Industry leaders suggest such corridors could diversify export routes while reducing reliance on traditional chokepoints like Hormuz and the Suez Canal.
Executives, including Yossi Abu, have also pointed to Mediterranean export options via Israel and Egypt, emphasising the need for greater regional control over energy flows.
War driving strategic urgency
The renewed focus on pipeline diversification follows escalating tensions tied to U.S. military operations in Iran under Operation Epic Fury, which have heightened fears of disruptions in the Strait of Hormuz—a passage that handles nearly a fifth of global oil trade.
Recent threats and incidents in the region have already forced rerouting of shipments and increased insurance costs, prompting Gulf producers to accelerate contingency planning. Existing alternatives, such as Abu Dhabi’s Fujairah pipeline, are being expanded, while Saudi Arabia is also investing in Red Sea export infrastructure, including projects linked to the NEOM development.
Implications for global markets
The shift has significant implications for global energy markets. Reduced dependence on Hormuz could:
- Lower supply disruption risks
- Stabilise oil price volatility
- Reshape global trade routes
For India, which imports nearly 85% of its crude oil from the Gulf, diversified supply routes could enhance energy security and reduce exposure to geopolitical shocks.
The Gulf’s push to build alternative energy corridors marks a long-term strategic recalibration driven by geopolitical uncertainty. While high costs and political complexities remain major hurdles, the urgency created by current conflicts is accelerating decision-making.
As industry leaders and governments move from planning to execution, the region appears to be transitioning from reliance on a single chokepoint to a multi-route energy architecture, reshaping global oil trade dynamics in the process.