Context:

Disruption of Hormuz is pushing Middle Eastern producers to expand pipelines, but analysts warn new routes won’t eliminate supply risks as Iran can target infrastructure directly. Projects in the UAE and Saudi Arabia, plus a revived Iraq–Syria corridor with U.S. involvement, aim to diversify export routes, yet capacity growth remains a hedge rather than a substitute for Hormuz. By 2028, regional pipeline capacity could exceed 14 million barrels per day, contributing to greater resilience but still vulnerable to low-cost attacks and political shocks. The overall outlook emphasizes diversification and redundancy as essential, even as threats persist and new bottlenecks emerge overseas.

Dive Deeper:

• Iraq’s oil production declined to about 1.9 million barrels per day in June, down from 4.2 million bpd in February, due to disruptions affecting its southern exports via Basra.

• The UAE plans to double export capacity outside Hormuz by completing a second pipeline to Fujairah on the Gulf of Oman, while Saudi Arabia contemplates a Red Sea pipeline expansion by about 2 million bpd.

• Goldman Sachs notes at least seven pipelines in or planned for the region, with potential regional capacity rising to more than 14 million bpd by the end of 2028, exceeding a large portion of pre-war Gulf exports.

• Analysts caution that pipelines provide a geopolitical hedge rather than a replacement for the Strait of Hormuz, since attacks can target loading facilities, pumping stations, and terminals along these routes.

• Iran has previously attacked a pumping station on Saudi Arabia’s Red Sea pipeline, reducing throughput by around 700,000 bpd, illustrating persistent vulnerability to kinetic disruption.

• Iran and its Houthi allies threaten to disrupt Red Sea exports, with statements about closing Bab el-Mandeb if U.S. action against Iran escalates, underscoring broader regional risk.

• Experts emphasize the strategic importance of Yamdu/Yanbu terminal capacity and its critical role in maintaining flow to global markets, while noting that diversification alone does not fully insulate the region from shocks.