The U.S.-Israeli conflict with Iran has severely curtailed maritime traffic through the Strait of Hormuz, with shipping data recording only three vessels traversing the critical waterway in a recent 24-hour period. This disruption, described by the International Energy Agency (IEA) as the largest on record, significantly impacts global energy supplies previously relying on the strait for one-fifth of the world's oil and liquefied natural gas. The escalating tensions have forced a re-evaluation of alternative export routes, placing unprecedented focus on existing and conceptual bypass pipelines.
After Iran briefly declared the Strait open last Friday, more than a dozen tankers navigated the narrow passage. That fragile respite proved temporary. A ceasefire between the United States and Iran appeared in jeopardy this past Tuesday, following Iran's public vow to retaliate for the U.S. seizure of one of its vessels.
Tehran subsequently refused to engage in new peace discussions, effectively reinstating the severe restrictions on commercial shipping. This geopolitical friction translates directly into choked supply lines. The numbers on the shipping manifest tell the real story of this strategic choke point, underscoring its vulnerability.
The International Energy Agency characterized this disruption as the largest supply interruption ever recorded. This surpasses the combined impact of the oil shocks from the 1970s and the loss of Russian pipeline gas that followed Moscow's invasion of Ukraine. For global energy markets, this means higher volatility.
Crude prices reacted with immediate jumps. Refined product costs quickly followed. Historically, the Strait of Hormuz has handled approximately one-fifth of the world's total oil and liquefied natural gas supply.
Its closure, or even severe limitation, sends ripples through every economy dependent on these resources. David Park, a veteran observer of global trade, often notes that trade policy is foreign policy by other means. This current situation exemplifies that principle, as military actions directly dictate commodity flows and pricing.
Facing this bottleneck, energy producers and consumers alike are scrutinizing alternative export bypasses for oil and gas. Saudi Arabia operates a 1,200-kilometer East-West pipeline. This critical artery can transport up to seven million barrels per day (bpd) of crude from its eastern fields to the Red Sea port of Yanbu.
Effective exports via this route typically hover around 4.5 million bpd, contingent on available tanker capacity and jetty infrastructure at Yanbu. From Yanbu, shipments can continue to Europe via the Suez Canal. They can also travel south through the Bab el-Mandeb strait to reach Asian markets.
However, the Bab el-Mandeb route carries its own set of security risks. Yemen's Houthi militants have launched attacks on tankers in this area during the ongoing Gaza conflict. This adds another layer of complexity to an already strained global shipping network.
Every transit point becomes a potential flashpoint. Follow the supply chain, and you quickly encounter geopolitical realities. The United Arab Emirates offers another bypass option with the Abu Dhabi Crude Oil Pipeline (ADCOP).
This 360-kilometer pipeline, operated by ADNOC and commissioned in 2012, runs from Abu Dhabi's Habshan onshore fields to Fujairah on the Gulf of Oman. Its design capacity ranges from 1.5 to 1.8 million bpd, providing a direct route to the Gulf of Oman, outside the Strait of Hormuz. However, even this alternative has not been immune to regional instability.
Oil loadings at Fujairah have been affected by drone attacks since the Iran war began in late February. This demonstrates the pervasive nature of the conflict's impact. Iraq also possesses a northern export route.
This pipeline runs from Kirkuk to Turkey's Mediterranean port of Ceyhan, traversing the Kurdistan region. This route saw a restart last September after a two-and-a-half-year shutdown, following an interim agreement between Baghdad and the Kurdistan Regional Government. On March 17, Iraq commenced pumping 170,000 bpd through this line.
Iraq's national oil company, SOMO, aims to increase this volume to 250,000 bpd, having secured export contracts via Turkey, Jordan, and Syria. This diversified approach seeks to mitigate dependence on a single route. Even Iran itself has explored bypass options.
The International Energy Agency noted in its latest oil market report that Iran might utilize the Jask terminal. This terminal would be fed by the one-million-bpd Goreh-Jask pipeline, allowing Iran to bypass the Strait of Hormuz for some of its exports. While the terminal's construction is not fully complete, a test loading from Jask successfully occurred in 2024.
This internal bypass reflects a strategic move to reduce vulnerability to external pressures on its primary shipping lanes. Beyond existing infrastructure, several conceptual projects remain on the drawing board. Last September, Iraq announced it was considering a pipeline from Basra to Oman’s port of Duqm, situated on the Gulf of Oman.
This project remains in its earliest conceptual stages, with various overland routes through neighboring countries and the more costly option of a subsea pipeline currently under study. The complexity of regional politics and the sheer engineering challenges often stall such ambitious plans. Another proposed Iraqi project involves a one-million-bpd pipeline from Basra to Jordan's Red Sea port of Aqaba.
This route would also bypass Hormuz. First suggested in the 1980s and approved in principle in 2022, the project continues to face significant hurdles. High costs, security concerns, and persistent political disagreements have prevented its advancement.
These long-standing obstacles highlight the difficulty of building new, large-scale energy infrastructure in a volatile region. The most ambitious bypass idea, a canal cutting through the Hajar Mountains toward Fujairah, akin to the Suez or Panama Canals, remains purely theoretical. Such a project would encounter extreme engineering challenges.
Its estimated cost would run into hundreds of billions of dollars. These are not quick fixes. They are long-term, capital-intensive endeavors that require decades of stability and investment.
Why It Matters: The disruption in the Strait of Hormuz extends far beyond crude oil prices. It impacts the cost of transportation, manufacturing, and ultimately, consumer goods globally. When a critical chokepoint like Hormuz falters, the invisible supply chains connecting factories in Shenzhen to grocery shelves in Ohio experience friction.
Higher energy costs inflate production expenses for everything from plastics to fertilizers, translating into higher prices for everyday items. The stability of global trade relies heavily on the free flow of energy, making these bypass options not just regional concerns, but global economic imperatives. Key Takeaways: - The Strait of Hormuz has seen traffic drop significantly, with only three vessels passing in a recent 24-hour period due to the U.S.-Israeli conflict with Iran. - The International Energy Agency calls this the largest supply disruption on record, surpassing previous major oil shocks. - Existing bypass pipelines in Saudi Arabia (East-West) and the UAE (ADCOP) offer some alternative capacity but face their own security challenges and limitations. - Iraq is restarting its northern export route to Turkey's Ceyhan and exploring conceptual pipelines to Oman and Jordan, though these face significant hurdles. - Iran is also developing its Jask terminal and Goreh-Jask pipeline to bypass the Strait for its own exports.
Looking ahead, the immediate focus remains on diplomatic efforts to de-escalate tensions between the U.S., Israel, and Iran. The outcome of any renewed ceasefire talks will directly influence shipping security in the Strait. Energy markets will closely watch for any sustained increase in crude flows through alternative pipelines, particularly Saudi Arabia's East-West system.
Additionally, observers will monitor the progress, or lack thereof, of Iraq's conceptual pipeline projects, as long-term energy security demands diversified transport infrastructure. The next few weeks will provide critical indicators of how global trade adapts to these ongoing pressures.
Key Takeaways
— - The Strait of Hormuz has seen traffic drop significantly, with only three vessels passing in a recent 24-hour period due to the U.S.-Israeli conflict with Iran.
— - The International Energy Agency calls this the largest supply disruption on record, surpassing previous major oil shocks.
— - Existing bypass pipelines in Saudi Arabia (East-West) and the UAE (ADCOP) offer some alternative capacity but face their own security challenges and limitations.
— - Iraq is restarting its northern export route to Turkey's Ceyhan and exploring conceptual pipelines to Oman and Jordan, though these face significant hurdles.
— - Iran is also developing its Jask terminal and Goreh-Jask pipeline to bypass the Strait for its own exports.
Source: The Independent
