Source: China Chemical Industrial Parks

According to data released on the 15th by Windward, a maritime data analytics firm, no vessels transited the Strait of Hormuz on the 14th—the first time this has occurred since the outbreak of the U.S.–Israel–Iran conflict. Prior to the conflict, an average of 77 ships passed through the strait each day. Amid ongoing geopolitical tensions, international crude oil futures prices once again broke the $100-per-barrel mark at the start of the new trading week on the evening of the 15th.

Whenever tensions rise or war breaks out, shipping through the Strait of Hormuz is almost invariably disrupted or brought to a halt, triggering a sharp spike in global oil prices. Given their vast oil reserves, have the Gulf states sought alternative routes for exporting their crude? As the critical maritime artery for global oil transport, is the Strait of Hormuz truly irreplaceable?

Oil pipelines are few and far between.

Oil pipelines are the primary alternative for transporting crude oil while bypassing the Strait of Hormuz; however, pipeline infrastructure in the region is limited to just a handful of lines, mainly two in the United Arab Emirates and Saudi Arabia.

The Abu Dhabi Crude Oil Pipeline in the United Arab Emirates stretches from the Habshan oilfield, the country’s main oil-producing region, in the west to the Port of Fujairah in the east, and was officially commissioned in July 2012. The pipeline has a total length of 420 kilometers, including approximately 405 kilometers of onshore pipeline and a 13.6-kilometer subsea section that connects the mainland to the Persian Gulf and the Gulf of Oman, thereby bypassing the Strait of Hormuz.

Construction of Saudi Arabia’s East–West Pipeline began during the Iran–Iraq War in the 1980s. The pipeline stretches more than 1,200 kilometers, running from the country’s eastern oil-producing region along the Persian Gulf to the Red Sea port of Yanbu. Recently, Amin Nasser, President and CEO of Saudi Aramco, stated that the company’s maximum sustained daily production capacity has reached 12 million barrels and that it is making full use of the East–West Pipeline to maintain supply.

According to estimates by the International Energy Agency, since the outbreak of the U.S.–Israel–Iran conflict, more than a quarter of crude oil and petroleum products such as diesel that are normally shipped through the Strait of Hormuz have still been able to leave the Gulf region, primarily via the two pipelines mentioned above.

According to reports by the U.S. consumer news and business channel, citing energy analysts, oil transiting the Strait of Hormuz typically amounts to 20 million barrels per day. By comparison, the Saudi East–West Pipeline has a capacity of nearly 7 million barrels per day, but 2 million of that is allocated for supply to refineries in the west, leaving only 5 million barrels available for export. The UAE’s Abu Dhabi Crude Oil Pipeline has a rated capacity of 1.5 million barrels per day; however, given the high risk of military strikes against oil infrastructure, energy analysts adopt a conservative estimate of the pipeline’s current actual throughput, projecting it at just slightly over 70% of its rated capacity.

The Strait of Hormuz is irreplaceable.

According to a report by the U.S. newspaper The New York Times on the 14th, in order to bypass the Strait of Hormuz for oil transportation, many Gulf states would need to construct cross-border oil pipelines. However, due to a combination of geographical constraints, political dynamics, and economic conditions, building such transnational pipelines is not only extremely costly but also politically highly sensitive. The report cites Qatar as an example, noting that the country severed diplomatic ties with its neighbor the United Arab Emirates in 2017 and did not restore relations until 2023.

Even if the Strait of Hormuz is bypassed, no oil pipeline can be considered entirely safe. According to John Browne, former CEO of BP, because oil and gas facilities can become targets of attack, there is no “completely secure” solution to this problem. In May 2019, Saudi Arabia’s East–West Pipeline was shut down after being struck by Houthi forces from Yemen.

In addition to laying oil pipelines, establishing a unified passenger-and-freight rail transport system represents another option for bypassing the Strait of Hormuz in oil transportation. Although this possibility has been discussed for more than a decade, it remains uncertain whether it can ever be put into practice. According to The New York Times, compared with building oil pipelines, constructing a multinational oil-export infrastructure is far more challenging and is unlikely to overcome economic and political constraints.

In response to U.S. efforts to block oil exports, Iran commissioned an oil pipeline in July 2021 that enables crude to be shipped by land, bypassing the Strait of Hormuz. The 1,000-kilometer pipeline runs from Golestan in Iran’s Bushehr Province in the west to Jask Port on the Gulf of Oman in the east.

Even so, the Strait of Hormuz remains an indispensable maritime chokepoint for global oil transportation. As the sole shipping lane connecting the Persian Gulf to the outside world, it handles more than one-quarter of total global seaborne oil trade and roughly one-fifth of global liquefied natural gas shipments, which are then delivered to markets around the globe.

According to estimates by the International Energy Agency, since the outbreak of the U.S.–Israel–Iran conflict, oil shipments through the Strait of Hormuz have plummeted to less than 10% of pre-conflict levels. With no alternative shipping routes available, many oil-exporting countries have been forced to cut production. Norwegian consulting firm Rystad Energy estimates that, over just a little more than a week, the combined oil output of Iraq, Kuwait, the United Arab Emirates, and Saudi Arabia has declined by several million barrels.

The International Energy Agency estimates that, as of the 11th, oil-producing countries in the region have collectively cut production by at least 10 million barrels per day, equivalent to 10% of global oil supply. With many oil companies shutting down or reducing output at their refineries, production of gasoline, diesel, and jet fuel has also declined.