Exporting oil can be a dangerous adventure. Some tankers dare to make the dangerous journey through the Strait of Hormuz. They navigate in the darkness close to the Omani coast, turning off their transponders to hide their movements from the Iranian military. Some are extensively protected by the American military. But the regime in Tehran, which maintains an iron stranglehold on the strategically important strait, remains a constant threat. Ships repeatedly come under fire.
About 20 million barrels of crude oil per day passed through the strait connecting the Gulf of Oman to the Persian Gulf before the Iran War. Likewise, a fifth of the liquefied natural gas traded from the world. Now it's just a fraction of that, according to industry services.
There is no end to the blockade in sight. Currently, Tehran appears to be preparing for a battle of attrition with the United States. The Islamic Republic definitely does not want to give up control of the waterway and the associated blackmail potential. The regime in Tehran has made it clear that Washington should not confuse openness to dialogue with a willingness to capitulate. Kazem Gharibabadi, Iran's deputy foreign minister, recently said: "The Strait of Hormuz belonged to Iran, belongs to Iran and will belong to Iran."
“The Hormuz effect can only be watered down”
The pressure on the vital oil economies of Washington's allies in the Gulf is unlikely to go away any time soon. And even an end to the Iran war does not necessarily mean a permanent solution to this problem. The rich oil monarchies are already preparing for the fact that the Strait of Hormuz will be permanently threatened by Iranian blackmail attempts. They are investing billions of dollars to spend energy exports in other ways, such as pipelines and other infrastructure. They are also pushing ahead with the construction of storage facilities in countries such as Japan, South Korea or India in order to be able to rely on local reserves in the event of a crisis.
These are all costly and sometimes risky undertakings. Experts are therefore cautious about their chances of success. "The quantities transported through the strait are unlikely to reach pre-war levels. But the Hormuz route cannot be replaced. The effect can only be diluted," explains Dubai-based energy market expert Bachar El-Halabi from the industry service Argus Media. Economists in the Gulf speak of a long-term strategic vision that will take years, if not decades, to realize.
Not all states are equally well positioned for this project. Bachar El-Halabi counts heavyweights such as Saudi Arabia and the United Arab Emirates among those Gulf monarchies that have better opportunities to diversify their export routes. The leadership in Riyadh is already increasingly using an east-west pipeline to the oil port of Yanbu on the Red Sea. In this way, the kingdom can transport a substantial amount of around seven million barrels of oil per day. Yasser Rumayyan, the head of the state oil company Aramco, has described this pipeline as a “lifeline”. Saudi Arabia is currently working to expand this capacity and is also considering laying a second pipeline for refined oil products.
New pipelines under construction
But the arm of the Iranian Revolutionary Guard and its shadow army of Arab militias also extends into the Red Sea. The Houthi rebels, supported by Tehran and hostile to Saudi Arabia, are using their drones and missiles to threaten Saudi tankers and another strategically important strait: the Bab al-Mandab (Gate of Tears), which connects the Indian Ocean with the Red Sea. The Houthis have already attacked oil infrastructure in Yanbu, and the east-west pipeline itself is also vulnerable.
The Emirates is also working to reduce its dependence on the Hormuz route. The leadership in Abu Dhabi has instructed the state oil company Adnoc to quickly move forward with the construction of a new pipeline to the port of Fujairah, which is scheduled to be put into operation in 2027. This port is located on the southern east coast of the Emirates in the Gulf of Oman - and therefore already on the other side of the Strait of Hormuz. With this project, which is already being built day and night, the Emirati leadership wants to double the current transport capacities.
Up to 1.8 million barrels of oil per day can be transported via the existing connection from Habshan to Fujairah. As in Yanbu, Saudi Arabia, there were attacks on the port of Fujairah over the course of the war. Iran would therefore have the opportunity to hinder this export route with drones and missiles - even if this would of course be associated with high political costs for Tehran.
Qatar and Kuwait face greater challenges
Adnoc also announced that it would invest $8.2 billion to expand its natural gas business. In this context, the company is considering building an export facility for liquefied natural gas, which will also be located on the east coast, as Peter van Driel, the group's chief financial officer, told Bloomberg TV almost two weeks ago. But no decisions have been made yet.
Other Gulf energy exporters face greater difficulties because they have no coastline beyond the Strait of Hormuz. Qatar, for example, would have to lay long, new pipelines to the Red Sea and also build extremely expensive plants to liquefy natural gas. These would have political costs. In this way, the extremely rich emirate would become more dependent on the goodwill of powerful sister states such as Saudi Arabia, through whose territory the new export routes would run. Relations between the two countries are currently comparatively good. But they were not always free of tensions. Gulf observers believe it is possible that Doha would be open to its own arrangement with the Iranian regime.
Strategic self-interests are at the forefront in the Gulf
Kuwait faces similar problems. Oil Minister Tariq Sulaiman told the Japanese news agency Kyodo in early August that the emirate was considering connections via the Saudi network to the Red Sea or the port of Fujairah. The project is “huge,” said the minister.
“In general, the development of new export routes would have to be accompanied by closer cooperation between the Gulf states,” explains Bachar El-Halabi. According to him, this also applies to other projects such as the establishment of trade corridors or the mega-project of a railway network that is intended to connect the states of the Gulf Cooperation Council (GCC). “Agreements on free trade zones and streamlined customs procedures are needed.”
Something like this works in individual cases. But at the moment it does not look entirely as if the Arab Gulf states are fundamentally moving closer together in the face of the threat from Iran. A Western diplomat speaks of an “ultra-pragmatic approach” that the leaders took. However, this cooperation is primarily based on the respective – sometimes conflicting – strategic self-interests. Bypassing the Strait of Hormuz therefore seems like a major political project.
