Full Breakdown
Hormuz Conflict Spurs Race for Alternative Gulf Oil Routes
7/19/2026, 11:39:51 AM
Escalating Conflict Threatens Hormuz and Export Infrastructure
In the weeks following renewed U.S. strikes on Iran, Iranian forces have attacked tankers and fired drones and missiles at facilities in Bahrain, Kuwait and Jordan. The U.S. responded with additional strikes, a naval blockade of Iranian ports and the revocation of a sanctions waiver that previously allowed Iran to sell oil openly. Traffic through the Strait of Hormuz has again nearly stopped, prompting Gulf producers to accelerate plans for export routes that bypass the choke point.
Background & Context
Before the war that began on February 28, the Strait of Hormuz handled roughly 20 % of global liquefied natural gas and 20 % of world oil, moving about 20 million barrels per day (U.S. Energy Information Administration). In the first quarter of the conflict, flows fell to ? 14.6 million barrels per day. A preliminary U.S.–Iran cease-fire signed on June 17 offered brief relief, but the agreement has since collapsed.
Key Players and Their Strategies
- Iran: Demands that ships use a northern route through its waters and has charged $2 million (€1.7 million) per vessel; threatens to target alternative pipelines.
- Saudi Arabia: Operates the East-West Pipeline (Petroline), a 1,200-km line moving up to 7 million barrels per day from Abqaiq to Yanbu on the Red Sea, with plans to expand capacity.
- United Arab Emirates (UAE): Runs the Abu Dhabi Crude Oil Pipeline (Habshan-Fujairah), capable of 1.8 million barrels per day, and is fast-tracking a second West-East pipeline slated for 2027 completion, alongside a new Fujairah port and container terminal.
- Iraq: Constructing the Basra-Haditha Pipeline, approved in 2024 and started in May 2026, linking to Jordan’s Red Sea port of Aqaba.
- United States: Provides naval escorts along a southern route hugging Oman’s coast, revokes oil-sale waivers, and backs the revival of a dormant Iraq-Syria pipeline.
- MARISKS (Greek maritime risk-management firm) and energy analysts monitor the heightened escalation risk.
Data & Statistics
- Existing Gulf pipelines can reroute a maximum of 8.8 million barrels per day (International Energy Agency).
- The Bab el-Mandeb Strait—a secondary chokepoint—handled about 5 % of global oil before the conflict (IEA).
- Global oil production outside the Gulf has risen by ? 2 million barrels per day above 2025 levels, driven by the U.S., Venezuela, Guyana and Russia (International Monetary Fund).
Why It Matters
Disruption of Hormuz threatens worldwide oil supply chains, potentially raising prices and prompting a shift toward alternative energy sources. Expanding pipeline capacity requires 18–24 months and billions of dollars, leaving a window where both the Strait of Hormuz and Bab el-Mandeb remain vulnerable.
Official Statements & Responses
The United States has restarted a naval blockade of Iranian ports and revoked the sanctions waiver that permitted Iranian oil sales. Iran has signaled it will “either all regional energy producers can export, or no one does,” warning of possible attacks on alternative Gulf infrastructure. MARISKS cautioned that “the likelihood of further escalation remains very high.”
Criticism & Opposition
Energy policy analyst Simon Henderson of the Washington Institute warned that many pipeline proposals “are to get oil…to the Mediterranean coast, which would be sort of nice, but it's not where it needs to be,” and noted that the UAE port of Fujairah has already been attacked, questioning the durability of new routes.
Verbatim Quotes
- “Several months of bombing campaigns have not undone Iran's ability to control the Strait of Hormuz,” — Guntram Wolff, senior fellow, Bruegel
- “The limited progress achieved following the June ceasefire has now effectively unraveled,” — MARISKS, Greek maritime risk-management firm
- “We never really lost all the barrels from the Middle East that would go through the Strait of Hormuz because the Saudis stepped in immediately,” — Carol Nakhle, CEO, Crystol Energy
- “I think people are running ahead of themselves at the moment,” — Simon Henderson, energy policy analyst, Washington Institute
- “The Houthis in Yemen have been playing games and interfering with shipments, so the [Saudi pipeline] is a partial fix, but not a reliable fix," Mr Henderson said.” — Simon Henderson
What’s Next
The UAE’s second West-East pipeline aims for completion in 2027, while Iraq and Jordan are intensifying talks on the Basra-Haditha link. The United States continues to support the revival of the Iraq-Syria pipeline, and regional navies maintain escort operations along the southern alternative route.
