Middle East Oil Export Alternatives Strained by Strait of Hormuz Disruption

The Strait of Hormuz disruption due to the U.S.-Israeli war with Iran has exposed the Middle East's limited alternatives for exporting its hydrocarbons, according to the International Energy Agency (IEA). The agency called it the largest supply disruption on record, bigger than the oil shocks of the 1970s and the loss of Russian pipeline gas after Moscow's invasion of Ukraine combined.

Existing pipelines in the region include Saudi Arabia's East-West pipeline, which can transport up to 7 million barrels per day (bpd) of crude to the Red Sea port of Yanbu. From there, shipments can travel to Europe via the Suez Canal or south via the Bab el-Mandeb strait to reach Asia.

Another existing pipeline is the Habshan-Fujairah pipeline in the UAE, operated by ADNOC and commissioned in 2012. However, oil loadings at Fujairah have been affected by drone attacks since the Iran war started at the end of February.

The Kirkuk-Ceyhan pipeline in Iraq-Turkey is also operational, with plans to reach 250,000 bpd after a 2-1/2-year shutdown. Additionally, Iran may be able to utilize the Jask terminal, fed by the 1 million bpd Goreh-Jask pipeline, as an alternative route.

Possible alternative routes include an Iraq-Oman pipeline and an Iraq-Jordan pipeline, both of which are still in the conceptual or early development stages. A canal bypassing Hormuz remains purely conceptual due to extreme engineering challenges and potential costs in the hundreds of billions of dollars.