Gulf States Build Trade Bypass as Iran Closes Hormuz Strait

The Government of Iran has closed the Strait of Hormuz, utilizing the disruption of the international waterway as leverage to pressure the United States to end the war. Tehran proposed a deal to the U.S. prioritizing the resolution of the conflict and the reopening of the strait over nuclear discussions.

In response, the Government of Saudi Arabia has maximized its East-West pipeline to reroute oil to the port of Yanbu for Asia-Pacific customers. To mitigate future risks at both the Strait of Hormuz and the Bab al-Mandab Strait, Saudi officials are studying the revival of the Hijaz Railway to connect the Arab Gulf with Turkiye and Europe. Simultaneously, the Middle Corridor trade route via Central Asia is gaining importance as a bypass for Iranian-influenced territories.

The United Arab Emirates and other Gulf monarchies are seeking to build new pipeline and port capacities to eliminate their strategic dependence on the strait. While Saudi Arabia and the UAE have existing alternatives, they cover only a fraction of pre-war exports, leaving Kuwait, Qatar, and Bahrain without coastline alternatives. Efforts to establish a Gulf Cooperation Council rail network and the India-Middle East-Europe Economic Corridor continue, though they face delays due to high costs and diplomatic tensions.