Oil Industry Explores New Routes as Iran War Disrupts Supply Chains

The ongoing Iran war is prompting the oil industry to rethink its supply chain strategies, shifting from a just-in-time model to a more resilient just-in-case approach. Attacks on shipping routes like the Strait of Hormuz and the Bab el-Mandeb Strait have disrupted energy exports, leading to higher prices and global inflation. TotalEnergies CEO Patrick Pouyanne emphasized the need to secure export routes, highlighting plans to invest in pipelines that bypass these critical chokepoints. He noted TotalEnergies' involvement in an Iraq-to-Syria pipeline and efforts to double capacity for a pipeline system leading to the UAE port of Fujairah.

BP CEO Meg O'Neill discussed the potential for new northern export routes following the redevelopment of the Kirkuk oilfield. While she acknowledged the Iraqi government's efforts to explore alternative routes, she expressed uncertainty about investing BP shareholder money in these projects. Meanwhile, Chevron CEO Mike Wirth expressed optimism about negotiations with Iraq for new pipelines to Mediterranean ports, though he suggested that funding would likely require a multi-party consortium rather than Chevron alone.

Kuwait Petroleum Corporation's CEO, Shaikh Nawaf Al-Sabah, stressed the shared responsibility between producers and importers in securing stable export routes. He mentioned discussions with Saudi Arabia and the UAE on new pipelines, emphasizing that importers must also contribute to the necessary investments. The industry's shift towards more secure, alternative routes reflects a broader recognition of the vulnerabilities in traditional supply chains.