The Hormuz Strait deadlock is accelerating the restructuring of energy corridors, driving pipeline investments worth tens of billions, as the Middle Eastern oil landscape undergoes its most significant transformation in decades.

The Hormuz Strait deadlock is accelerating the restructuring of energy corridors, driving pipeline investments worth tens of billions, as the Middle Eastern oil landscape undergoes its most significant transformation in decades.

智通财经2026/07/23 14:46

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Before the war, around 15 million barrels of Persian Gulf crude oil were transported daily to global markets via the Strait of Hormuz. As the geopolitical deadlock persists, Gulf states are accelerating at least seven major pipeline projects, planning to reroute more crude oil to ports along the Red Sea, Suez Canal, and the Gulf of Oman.
The east-west pipeline in Saudi Arabia and the pipeline from the UAE to Fujairah are both now operating near full capacity. The combined pre-war idle capacity of both pipelines was about 3.5 to 5.5 million barrels per day, but this excess space has been almost entirely absorbed during the ongoing crisis.
Abu Dhabi is speeding up construction of a parallel 300-kilometer pipeline to Fujairah Port, costing $3 billion and targeting more than 1.2 million barrels per day of additional capacity. About half of the project has been completed, with initial plans aiming for completion early next year, though market institutions believe that due to port expansion needs, mid-year completion is more realistic.
Iraq is also actively planning alternative export routes, including proposals to transport crude from southern Basra fields to Ceyhan in Turkey and Banias in Syria by pipeline. Simultaneously, discussions with Jordan have resumed on a pipeline to Aqaba Port, to enable exports via the Red Sea or Suez Canal.
Goldman Sachs analysis shows that by the end of next year, new pipeline capacity bypassing Hormuz could reach 3.8 million barrels per day, and may rise to 7.3 million barrels by the end of 2028. By then, around 60% of the Gulf region's pre-war total daily exports (23 million barrels) could avoid the Strait of Hormuz.
However, alternative routes are not a cure-all: delivering crude by pipeline to the Mediterranean actually diverts oil away from Asia's main demand centers, ultimately requiring navigation around the southern tip of Africa, increasing both distance and costs. Red Sea exports also face risks from attacks by Yemeni Houthi forces, while the Suez Canal cannot accommodate ultra-large oil tankers.
Liquefied natural gas presents even more complex and costly challenges. Before the war, about one-fifth of global LNG—mainly from Qatar—was also shipped via the Strait of Hormuz. Pipeline alternatives for natural gas would require much larger engineering projects and far greater geopolitical coordination than crude oil.
From a market psychology perspective, the reshaping of medium- and long-term energy flows will transform the regional premium structure. Countries through which the pipelines run will see their geopolitical risk premiums repriced, while rerouting costs and capacity bottlenecks may support the oil price floor for a considerable time.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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The Hormuz Strait deadlock is accelerating the restructuring of energy corridors, driving pipeline investments worth tens of billions, as the Middle Eastern oil landscape undergoes its most significant transformation in decades.

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