Gulf Nations Build Pipelines to Bypass Blockaded Strait of Hormuz

Following the outbreak of war in February 2026, Gulf oil producers and the United States have accelerated the construction of a redundant network of pipelines and ports to bypass the Strait of Hormuz. The initiative follows Iranian blockades, sea mines, and missile strikes that reduced crude exports through the waterway from 20 million to approximately 3.7 million barrels per day. Goldman Sachs estimates these projects could insulate 60% of prewar exports from a Hormuz cutoff by the end of 2028.

Saudi Arabia has redirected substantial volumes through its East-West Pipeline to the Red Sea port of Yanbu, replacing roughly 61% of its lost Persian Gulf volume during April and May. The United Arab Emirates is fast-tracking a $3 billion pipeline to Fujairah, targeted for completion by 2027 to increase capacity to 3.6 million barrels per day. Iraq has signed over $60 billion in agreements with U.S. firms, including Chevron, to develop routes to Turkey, Syria, and Jordan.

Despite these efforts, new vulnerabilities have emerged. Houthi rebels in Yemen have targeted Saudi tankers in the Red Sea and declared a blockade of the Bab el-Mandeb strait. While Donald Trump claims the U.S. Navy controls the Strait of Hormuz after mine-sweeping operations, Iranian officials maintain the waterway will remain closed until the U.S. complies with a June framework agreement. To further hedge against volatility, Gulf nations are expanding oil storage capacity in South Korea, Japan, and India.