Gulf Pipelines Emerge as Vital Oil Arteries Amid Hormuz Blockade
As the Strait of Hormuz faces a blockade due to escalating US-Iran hostilities, two key Gulf pipelines—one in Saudi Arabia and another in the United Arab Emirates—have become the primary overland routes for crude oil to reach global markets. This development underscores the strategic importance of these infrastructures in mitigating a potential energy crisis.
Saudi and UAE Pipelines: Operational Lifelines
The most significant pipeline is Saudi Arabia's East-West line, stretching 746 miles from the oil-rich eastern region to Yanbu on the Red Sea. The second is the UAE's Habshan-Fujairah pipeline, which transports crude from Abu Dhabi to the Gulf of Oman, bypassing the Strait of Hormuz. Both pipelines were designed for this exact scenario: ensuring oil flow when maritime chokepoints become unreliable.
According to a Wall Street Journal report, the Saudi pipeline could soon handle up to 7 million barrels per day, though domestic refining consumes about 2 million barrels, leaving 5 million barrels for export. The Emirati line adds 1.5 million to 1.8 million barrels daily, as per International Energy Agency data. While this doesn't fully replace Hormuz's capacity, it prevents market panic by maintaining partial supply.
Why These Pipelines Matter Now
The Strait of Hormuz typically facilitates about 20% of global oil and gas shipments. Its blockage shifts focus from whether prices will rise to how high and for how long. These pipelines act as economic shock absorbers, crucial for stabilizing markets during emergencies.
Amin Nasser, CEO of Saudi Aramco, stated in a Financial Times report that the company aims to restore 70% of normal crude shipments by increasing flows to Yanbu. He warned that prolonged conflict could have "catastrophic consequences" for energy markets and "drastic" economic impacts. Nasser emphasized, "This is by far the biggest crisis the region's oil and gas industry has ever faced," highlighting the severity of the situation.
Historical Context and Current Risks
The Saudi East-West pipeline was built in the early 1980s during the Iran-Iraq war to protect against strategic chokeholds. Javier Blas of Bloomberg Opinion notes it was designed precisely for threats like Tehran blocking Hormuz. Today, with tanker traffic halted and insurance costs soaring, these pipelines offer a partial reroute, moving 6.5 million to 7 million barrels daily—still a gap compared to the usual 20 million barrels through Hormuz, but buying critical time.
However, these pipelines are now high-value targets. Iran has already attacked Gulf energy infrastructure, and experts fear similar strikes on Saudi and Emirati routes. Adi Imsirovic, a former trader, warned, "What really worries me is that it's not that hard to hit those pipelines." Additionally, oil from Yanbu must traverse the Red Sea, where Houthi threats persist, shifting rather than eliminating risks.
Market Gaps and Future Implications
Even at full capacity, the pipelines leave significant gaps. Saudi Arabia cannot reroute all exports, and countries like Iraq and Kuwait remain vulnerable. Refined products like diesel and jet fuel face greater squeezes than crude oil. Market disruptions are evident, with buyers paying premiums for barrels outside Hormuz, and shipping costs rising sharply.
Neil Crosby of Sparta Commodities summarized, "We've basically solved half of the problem." The next phase depends on conflict duration: a short war may see these pipelines averting an oil shock, but prolonged hostilities could expose their limits, leading to stranded crude and higher costs.
For now, the global oil system hinges on these two desert lines—one ending at Yanbu, the other at Fujairah—as the only functional routes until Hormuz reopens.
