Hormuz alternative routes: As war rages in the Middle East, the global oil market relies on these two pipelines to "stay alive"!

With the Strait of Hormuz under blockade, the lifeblood of the global oil market is dependent on two pipelines. They are currently the only significant alternative routes for Middle Eastern crude to enter the international market, and their operational status is crucial to global energy supply.

The two pipelines are: Saudi Arabia’s East-West pipeline, which transports crude westward to the Red Sea port of Yanbu; and the UAE’s Habshan–Fujairah pipeline, which bypasses the Strait of Hormuz to Fujairah port.

Saudi Aramco CEO Amin Nasser said Tuesday that this is the biggest crisis the region’s oil and gas industry has ever faced. The company expects to push the East-West pipeline to its maximum daily throughput of 7 million barrels within days, of which about 5 million barrels can flow to the international market and the rest will supply Saudi domestic refineries.

According to IEA data, the UAE’s Habshan–Fujairah pipeline has a maximum capacity of about 1.8 million barrels per day and was operating at about 1.1 million barrels per day before the conflict.

But this “life extension” also brings new vulnerabilities. The Saudi East-West pipeline has never operated at full capacity for a long period. Analysts warn that Iran may shift attack targets from the strait to land pipelines and ports; Fujairah port was damaged last week in a failed drone attack.

The Strait of Hormuz’s tanker traffic remains extremely sluggish, at least 25 tankers have turned to the Red Sea

Wallstreetcn previously published an article stating, according to Morgan Stanley’s March 10 daily tracking report, only 3 crude and product tankers exited the Persian Gulf via the Strait of Hormuz that day, with zero LNG and LPG vessels crossing, whereas the normal average is around 35 vessels; traffic remains extremely sluggish.

However, Goldman Sachs’ report differs from Morgan Stanley’s data. According to the Wall Street Journal citing Goldman’s report, oil flow through the Strait of Hormuz slightly increased on Mondaywith vessel numbers recovering to 20% of pre-war daily flow.

Goldman warns that the data may fluctuate, and tanker traffic is hard to track as ships turn off transponders to evade detection.

Meanwhile, Saudi Aramco’s East-West pipeline is about to reach its daily 7 million barrel maximum, UAE’s Fujairah exports soared 45% in a single month, and 25 tankers have rerouted to deploy via the Red Sea Yanbu port.

The two pipelines are the “only scalable replacement,” but can only ease rather than fill the gap

With the Strait of Hormuz blocked, Saudi Arabia’s East-West pipeline and the UAE’s Habshan–Fujairah pipeline are regarded as the only two current routes able to deliver “significant volumes” of crude bypassing the strait to the international market.

However, the pipelines cannot cover all the lost flow. The IEA notes that Saudi Aramco still has 800,000 barrels per day of refined products that must transit the strait and cannot be rerouted, in addition to crude stranded from Kuwait, Iraq, and Bahrain.

Sparta Commodities estimates that even with both pipelines operating at full capacity, around 10 million barrels of crude per day could still be trapped in the Persian Gulf. Sparta’s Neil Crosby says, “We’ve basically only solved half the problem.”

Saudi East-West pipeline races to 7 million barrels; Yanbu loading volume approaches record levels

The Saudi East-West pipeline is the core of alternative supply. Amin Nasser states Saudi Aramco expects to push the 746-mile-long East-West pipeline to a maximum daily throughput of 7 million barrels, with about 2 million barrels for Saudi refineries and about 5 million for export.

The IEA says this scale is equivalent to most of Saudi Arabian crude previously shipped via the Strait of Hormuz before the conflict.

But it’s also a stress test of infrastructure. The IEA emphasizes the pipeline has never operated at full capacity for an extended period. LSEG data shows Yanbu port’s average loading in the first nine days of March was 2.2 million barrels per day, significantly up from February’s 1.1 million barrels per day.

Kpler data shows that March may see at least 40 vessel loadings, which could push exports above 4 million barrels per day. Traders say Yanbu port has the capacity to handle over 4.5 million barrels per day, though historically it rarely exceeds 2.5 million barrels per day.

Historical Origin: A steel artery born for war

The original intention of building the Saudi East-West pipeline was to respond to the Persian Gulf crisis. In the early 1980s, the Iran-Iraq War threatened shipping security in the Gulf, prompting Saudi Arabia to invest in constructing this oil artery across the Arabian Peninsula to ensure crude could bypass the shadow of war to the Red Sea.

According to a 1983 internal memo from Saudi Aramco, more than 7,000 workers completed the project over four years, supervised by a unit under Mobil Oil, with the first crude shipped in 1981. To simultaneously build a supporting natural gas byproducts pipeline, the construction team used 2,000 tons of explosives to blast a trench across the peninsula.

The pipeline’s original intent was to allow Saudi exports closer access to Western markets, but now most Saudi crude exports are bound for Asia.

There was also a missed opportunity for expansion. In early 1990, Iraq and Saudi Arabia jointly opened a large pipeline to deliver Iraqi crude directly to Yanbu to further expand Red Sea exports. But only seven months later, Saddam Hussein invaded Kuwait and the pipeline was mothballed, never put to use.

Fujairah route offers a “second outlet,” but freight and price spreads reshape trading logic

The UAE’s Habshan–Fujairah pipeline sends Abu Dhabi crude to Fujairah port on the Gulf of Oman, becoming another way to bypass the Strait of Hormuz for exports.

IEA data shows the pipeline’s maximum capacity is about 1.8 million barrels per day, already operating at about 1.1 million barrels before the conflict.

Businesses are also feeling cost pressures. Petrobras states Saudi has fulfilled supply commitments via the pipeline; its CEO says the main current issue is rising shipping costs.

The scarcity of alternative crude is reflected in price structures. A signal is that Oman crude loaded outside the strait is trading at a premium to "Dubai" grades loaded at Fateh port inside the strait, which cannot be rerouted.

Safety risks spill over from the strait: Pipelines, ports, and Red Sea routes become new “soft spots”

The alternative routes are not “safe corridors.” Market participants worry that as the importance of these two pipelines surges, they may become more direct targets for attacks.

Analysts warn that there is little stopping Tehran from targeting Saudi and UAE pipelines.

Port-level risks have already appeared. Fujairah port was damaged last week in a failed drone attack, prompting some fuel suppliers to exit their contracts.

There are also risks in the Red Sea direction; in 2024, the Iran-allied Houthis in Yemen launched dozens of attacks on merchant ships. Though they haven’t renewed attacks during the current conflict,the threat persists. Britain’s maritime security firm Ambrey advises ships affiliated with the US and Israel to avoid the Red Sea.

According to Wallstreetcn’s article published March 5, France, Italy, and Greece have coordinated military deployments to secure Red Sea navigation, underscoring the importance and complexity of the region’s military dynamics.

Resulting impacts are new variables in current oil prices

Against the backdrop of disruptions in Hormuz, the loading pace at Yanbu and Fujairah, the stable operation of East-West and Habshan–Fujairah pipelines, and security events targeting pipelines and ports together determine whether “the supply gap will widen or be contained.”

For investors, the focus has shifted from strait transit alone to capacity realization of alternative routes, regional price spreads and freight changes, and any new signals of facility damage.

Risk warning and disclaimerThe market carries risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the individual investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions herein suit their specific situation. Investments made accordingly are at one’s own risk.