Gulf States Race to Find Oil Export Bypasses as Hormuz Stays Shut

Months of blockade at the Strait of Hormuz are compelling Persian Gulf oil exporters to reroute shipments and invest in new infrastructure. The narrow passage between Iran and Oman, through which about 20 percent of world oil exports once flowed toward Europe, Asia and North America, remains off-limits for free commercial transit despite a US-Iran declaration of intent to restore navigation.

Saudi Arabia Shifts Trade to the Red Sea

Saudi Arabia has responded most visibly by leaning on its East-West Pipeline, which carries crude from eastern oil fields to the Yanbu export terminal on the Red Sea. IMF PortWatch data for April and May show Gulf-coast exports collapsing from 47.5 million tonnes to just 6.3 million tonnes year-on-year, while Red Sea shipments surged from 29.6 million to 54.8 million tonnes, recovering about 61 percent of the lost volume.

Houthi Blockade Threatens Red Sea Route

The Red Sea alternative carries its own risks. Iran-backed Houthi rebels in Yemen operate near the Bab al-Mandab Strait at the waterway's southern end and have declared a naval blockade against Saudi Arabia. In July the group claimed it struck the Saudi tanker Encelia, alleging the vessel had breached that blockade.

UAE Plans Second East-West Pipeline

The United Arab Emirates is pursuing a longer-term solution: a new pipeline running parallel to the existing Abu Dhabi Crude Oil Pipeline (ADCOP), which links the Habshan oil and gas field to the port of Fujairah on the Gulf of Oman. By bypassing the Strait of Hormuz entirely, the route would insulate Emirati exports from any future closure. Construction details and a timeline have not yet been announced.

Together, the pipeline expansions and Red Sea rerouting signal a structural shift in Gulf oil logistics driven by the enduring uncertainty of the Iran-Hormuz standoff.