Middle Eastern oil producers are taking steps to reduce their reliance on the Strait of Hormuz due to ongoing disruptions caused by Iranian attacks on tankers. The U.S. is backing Iraq's initiative to rebuild a crude oil pipeline from Kirkuk to the Mediterranean, with American companies expected to participate in the construction.
Iraq's oil exports have suffered significantly, dropping over 50% in June to 1.9 million barrels per day, compared to 4.2 million bpd in February. The United Arab Emirates plans to double its export capacity with a new pipeline to Fujairah, while Saudi Arabia is considering expanding its pipeline to the Red Sea by 2 million bpd.
Goldman Sachs analysts noted that the region's pipeline capacity could exceed 14 million bpd by the end of 2028, representing over 60% of the Gulf states' pre-war export volume. However, geopolitical analyst Jennifer Li emphasized that these pipelines serve more as a hedge against disruptions rather than a complete solution, as they remain susceptible to attacks.
Iran's ability to target critical infrastructure, such as pumping stations, poses a significant risk, as demonstrated by a recent attack that reduced Saudi throughput by 700,000 bpd.
Additionally, threats from Iran and its Houthi allies to disrupt oil exports through the Red Sea could further complicate the situation, particularly affecting Saudi exports through the Yanbu terminal, which is vital for both the kingdom and the global oil market