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Doctor Anas Alhajji notes Saudi Arabia is working to expand pipeline capacity circumventing the Strait of Hormuz to 10 million barrels per day. The initiative plans to build routes across the Empty Quarter directly into Oman and the Arabian Sea, with regional peers like Iraq and Kuwait potentially connecting rather than routing toward the vulnerable Red Sea.
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Even a best-case combination of all available workarounds—rerouting pipelines, sanctions relief, and the fastest-ever strategic reserve release—would only mitigate 7 million of the 20 million barrels per day lost from a Hormuz closure. This leaves a practically unsolvable 13 million barrel per day shortfall.
Saudi Arabia's incentives are changing. Rather than maximizing output and paying Iran a potential toll to use the Strait of Hormuz, they may find it more profitable to export fewer barrels at a much higher price exclusively through the Red Sea.
Increasing global oil production is meaningless if the crude cannot be safely transported. The real challenge in modern energy conflicts is not total supply, but the logistical risk of moving it through contested chokepoints like the Strait of Hormuz, making transportation the primary driver of price instability.
The imperative to bypass the Strait of Hormuz is breathing new life into previously remote infrastructure plans. Major companies are now seriously considering projects like pipelines from Iraq through Syria or Turkey, which could fundamentally reshape regional economies and geopolitics.
While the Strait of Hormuz remains a key focus, energy supply risks are diversifying. Morgan Stanley observes the potential for disruption across multiple regional chokepoints and alternative shipping routes, creating a more complex and widespread threat to global oil markets.
The Houthis are escalating the regional conflict by threatening the Bab al-Mandeb Strait. This is a direct strategic move against Saudi Arabia, which has been developing Red Sea oil pipelines and ports as an alternative to the vulnerable Strait of Hormuz. This action applies new, direct pressure on global oil markets.
The current crisis is the catalyst for Gulf producers (Saudi Arabia, UAE, Iraq) to build extensive overland pipelines, permanently bypassing the Strait. This multi-billion dollar infrastructure spend will neutralize Iran's primary geopolitical weapon, fundamentally reshaping global energy security and logistics long-term.
While Saudi Arabia can increase oil flows through its east-west pipeline to bypass the Strait of Hormuz, the ultimate constraint isn't the pipeline itself. The real bottleneck is the Port of Yanbu on the Red Sea, which has a fixed daily export capacity, limiting the effectiveness of the entire bypass strategy.
The conflict highlights the immense strategic value of infrastructure that provides an alternative to the Strait of Hormuz chokepoint. Countries like Saudi Arabia with pipelines to the Red Sea are better insulated and may even profit, revealing a key geographical advantage over constrained nations like Qatar.
While global spare oil capacity exists as a buffer, it is heavily concentrated in Saudi Arabia, the UAE, and Kuwait. During a conflict, if the Strait of Hormuz is effectively closed, this capacity becomes physically trapped and cannot be deployed to global markets, nullifying its role as a price stabilizer.
