According to a report by The New York Times on August 12, the US-Iran war has caused the amount of oil transported through the Strait of Hormuz to plummet from about 20 million barrels per day before the war to only about 3.7 million barrels per day. This has forced Gulf oil-producing countries to invest billions of dollars in building or expanding pipelines and other infrastructure to bypass the Strait.
According to reports, the UAE is working day and night on the construction of a new auxiliary crude oil pipeline to transport oil from the Abu Dhabi offshore oil fields. The country plans to double its oil transportation capacity by bypassing the Strait of Hormuz, reaching 3.6 million barrels per day. The state-owned energy giant, Abu Dhabi National Oil Company (ADNOC), also stated this week that it is considering building liquefied natural gas export facilities along its eastern coast to bypass the strait.
Neighboring Saudi Arabia is also accelerating the expansion of an east-west oil pipeline with a total length of 1,201 kilometers. They hope to increase the existing pipeline capacity of 7 million barrels per day by another 1 to 2 million barrels. At the same time, they are considering building a smaller parallel pipeline for transporting refined oil products.
Kuwait is discussing with Saudi Arabia and other Arab countries the construction of pipelines to connect Kuwait's oil fields with ports in the Red Sea or Oman. Iraq and Jordan have also revived their long-neglected oil pipeline project, which could transport up to 1 million barrels of crude oil per day to the port of Aqaba along the Red Sea.
Additionally, Iraq is accelerating the reconstruction of a damaged oil pipeline, which will transport crude oil from Iraq’s Kirkuk oil field to the Mediterranean coast of Syria.
In addition to building alternative oil transportation routes, Gulf countries have also significantly expanded their energy storage facilities in Asian countries such as South Korea, Japan, and India. This ensures that even if the Strait of Hormuz is blocked, there will still be a large amount of oil reserves available for export to the Asian market.
Reports indicate that these measures suggest that war is changing the landscape of the oil industry in this region. Governments and companies in Gulf countries believe that it is necessary to strengthen supply security in an increasingly unstable regional situation. Even if the United States and Iran eventually reach a ceasefire, these oil exporting nations do not wish to rely excessively on the Strait of Hormuz as the sole transportation route.
Texas University at Austin energy analyst Kahl said, “Many people believe that the Strait of Hormuz will no longer be able to handle the same share of oil export transportation as it did before the war. No country in the world wants to rely too heavily on this transportation hub again.”
