The article discusses Iran’s significant influence over the Strait of Hormuz and how global oil markets are nearing a point where they might reduce dependence on this critical waterway. Despite ongoing military conflicts, the U.S. has struggled to establish alternative transit routes, with recent tensions deterring civilian shipping. Some countries, like India and Japan, have advised their vessels against crossing the strait, especially after Iranian attacks.
Before recent conflicts, around 20 million barrels of oil passed through the strait daily. Iran’s actions have caused severe disruptions in oil supply, prompting a scramble for alternative routes. Notably, certain pipelines in Saudi Arabia and the UAE are being utilized more extensively, along with increased overland trucking from Iraq to Syria.
The UAE is expediting the construction of a new West-East pipeline, while Saudi Arabia is enhancing its East-West pipeline capacity. A consortium is also exploring the restoration of an older pipeline from Iraq to Syria’s Mediterranean port. Turkey is proposing to extend the Kirkuk-Ceyhan pipeline, creating new export routes to lessen reliance on Hormuz.
Analysts from Goldman Sachs predict that by the end of next year, new pipeline capacity in the Middle East could cover over 45% of pre-war Gulf exports, potentially rising to 60% by 2028, and further to 75% in a scenario with accelerated developments. The typical construction timeline for regional projects is about 2.5 years, particularly quick during supply disruptions.
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