Oil Producers Are Trying to Leave the Strait of Hormuz Behind. Iran Has Other Plans.

Efforts by major Middle Eastern oil producers to build new export pipelines that bypass the Strait of Hormuz may reduce dependence on one of the world's most strategically important waterways, but energy analysts warn the projects will not eliminate Iran's ability to threaten global crude supplies.

According to a CNBC report, governments across the Gulf are accelerating pipeline construction after Iran and its regional allies intensified attacks on commercial shipping, exposing the vulnerability of oil exports that pass through the narrow maritime chokepoint.

While new infrastructure could provide alternative export routes, experts say pipelines remain exposed to the same type of low-cost military strikes that have disrupted shipping in recent months.

The latest projects come as regional oil producers attempt to shield their economies from a conflict that has reshaped global energy markets since the United States and Israel launched military operations against Iran earlier this year.

Among the most significant initiatives is Iraq's plan to revive a long-dormant crude oil pipeline connecting the northern city of Kirkuk with Syria's Mediterranean coast. A U.S. State Department official told CNBC that Washington supports rebuilding the route and expects American companies to participate in the project.

The alternative export corridor has become increasingly important for Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC). The country relies heavily on exports from its southern port of Basra, making it especially vulnerable to disruptions in the Strait of Hormuz.

CNBC detailed that Iraq's oil production fell by more than 50% in June to approximately 1.9 million barrels per day, down from 4.2 million barrels per day in February before the regional conflict escalated.

Elsewhere in the Gulf, the United Arab Emirates is moving forward with plans to double its export capacity outside Hormuz through a second pipeline leading to the Port of Fujairah on the Gulf of Oman. Saudi Arabia is also evaluating an expansion of its East-West pipeline to the Red Sea that could add another 2 million barrels per day of capacity, Reuters previously reported.

Analysts at Goldman Sachs estimate that seven pipeline projects currently under construction or in the planning stages across the Middle East could increase regional pipeline capacity to more than 14 million barrels per day by the end of 2028. That would represent more than 60% of the Gulf's prewar crude export volume of roughly 23 million barrels per day.

Despite those investments, energy security experts caution that pipelines should be viewed as a way to reduce risk rather than replace the Strait of Hormuz. Jennifer Li, a geopolitical analyst at energy consultancy Rystad, told CNBC that existing pipeline networks have already helped cushion global markets by allowing Saudi Arabia and the UAE to divert millions of barrels of crude away from Hormuz during the conflict.

However, she warned that pipelines remain attractive military targets. Iran previously demonstrated that vulnerability by striking a pumping station along Saudi Arabia's East-West pipeline in April, reducing throughput by roughly 700,000 barrels per day.

"The problem isn't the waterway," Bob McNally, founder of Rapidan Energy, said during CNBC's Power Lunch. "It's that Iran can use weapons to attack loading facilities, pumping stations, the end stations, these terminals, and the storage units of these pipelines."
The risks extend beyond the Persian Gulf.

Iran-backed Houthi forces in Yemen have threatened to disrupt shipping through the Bab el-Mandeb Strait, another vital global energy chokepoint connecting the Red Sea to the Gulf of Aden.

Earlier this week, senior Houthi political official Mohammed al-Farah said the group was prepared to close the strategic passage in coordination with Iran, according to state media reports. Reuters also reported Thursday that Tehran has asked the Houthis to shut the strait if the United States attacks Iran's power infrastructure.

Such a move would jeopardize Saudi Arabia's strategy of rerouting oil exports through its Red Sea terminal at Yanbu, effectively placing another major export corridor at risk.
"The importance of Yanbu to both Saudi Arabia and to the global oil market can't be underestimated," Michelle Wiese Bockmann, senior maritime intelligence analyst at Windward, told CNBC.