As the US and Iran skirmish for control of the Strait of Hormuz, in the ministries, boardrooms and financial hubs of the Gulf a different battle is under way. The unprecedented closure of the vital artery for oil, gas, fertilisers and other commodities has sparked a rush to maximise exports through alternative routes — and to develop new ones that, over time, promise to reshape Gulf trade flows. But new ports, pipelines and land links will take years to develop, can never fully bypass the strait, and will have their own risks. What has happened in the Gulf, moreover, has exposed the vulnerability of other maritime chokepoints to being used as geopolitical tools. Investing in reducing reliance on them today could pay dividends tomorrow.
Saudi Arabia and the United Arab Emirates have diverted a sizeable portion of the 20mn-plus barrels a day of crude that previously transited Hormuz by maxing out existing pipelines. Saudi Arabia’s 1,200km East-West pipeline to the Red Sea is pumping at up to its full emergency capacity of 7mn b/d — from 2mn b/d before the Iran war. The kingdom is looking to pipe out more of its 10.2mn b/d production through an expanded East-West link or new routes. The war is providing impetus, too, to enlarge Abu Dhabi’s pipeline to Fujairah, outside the Strait of Hormuz. Iraq has announced plans for pipelines to the Red Sea and Turkey.
Fewer alternatives exist for the one-fifth of global liquefied natural gas, mostly from Qatar, that transited the strait. But here, too, exporters are improvising workarounds and fast-tracking new connections. Plans are being dusted off for gas pipelines from Qatar to Turkey via Saudi Arabia, Jordan and Syria, or through Saudi Arabia, Kuwait and Iraq, and another to Egypt.