Hormuz crisis pushes Gulf states toward new oil export routes

The security crisis surrounding the Strait of Hormuz is forcing Gulf energy producers to reconsider how they move oil and gas to international markets, after the waterway was closed following US and Israeli strikes on Iran and Tehran’s subsequent response. The disruption has highlighted sharp differences between Gulf states depending on their access to alternative pipelines, ports and export facilities.

Hormuz exposes Gulf energy vulnerabilities

The Strait of Hormuz is one of the world’s most important energy corridors, carrying roughly one-fifth of global oil supplies under normal conditions. Its closure has affected Gulf producers differently, largely according to whether they possess infrastructure capable of moving energy exports without passing through the chokepoint.

Saudi Arabia and the United Arab Emirates (UAE) are the only Gulf countries with functioning pipeline systems that can substantially bypass Hormuz, according to the US Energy Information Administration. Kuwait, Qatar and Bahrain remain heavily dependent on maritime access through the strait, while Oman’s position outside the chokepoint has allowed it to play a different role during the disruption.

Kuwait and Qatar face severe export pressure

Kuwait has faced one of the sharpest impacts because it lacks an immediate alternative route for large-scale crude exports. The country’s daily oil production fell from around 2.6 million barrels before the conflict to 573,000 barrels in May as domestic storage capacity reached its limits.

Production and exports later improved, with Kuwaiti crude shipments reaching approximately 1 million barrels per day by September. That figure nevertheless remained below 36% of the country’s pre-crisis level. Kuwait has discussed longer-term pipeline alternatives with Saudi Arabia, but such projects would require years to develop and cannot resolve its immediate dependence on Hormuz.

Qatar faces a different but equally significant challenge because of its position as a major liquefied natural gas exporter. LNG cannot simply be redirected through an oil-style pipeline once it has been liquefied, leaving Qatar particularly exposed to disruptions in maritime transport.

A Qatari commercial vessel was attacked during the escalation, while regional security concerns forced Doha to reduce activity at the Ras Laffan LNG facility. Analysts estimate that the disruption could leave Qatar around 30 million metric tons short of its 2026 LNG export target.

Qatari officials have ruled out pursuing bypass pipelines, instead focusing on diplomatic efforts to restore maritime security. Doha is mediating US-Iran talks together with Pakistan as part of efforts to reopen the Strait of Hormuz.

Bahrain hit by refinery and storage damage

Bahrain has also suffered both logistical constraints and physical damage to energy infrastructure. The Sitra BAPCO refinery, the country’s sole oil-processing facility, had to suspend its 400,000-barrel-per-day operations after available storage capacity was exhausted.

The pressure increased following drone and missile attacks on April 5, when fires broke out at storage facilities at Sitra and several tanks sustained serious damage. The combination of restricted maritime access and infrastructure losses has placed additional strain on Bahrain’s energy sector.

UAE and Saudi Arabia rely on bypass routes

The UAE has been better positioned to maintain exports because of the Habshan-Fujairah pipeline, commonly known as the Abu Dhabi Crude Oil Pipeline (ADCOP). The 360-kilometer system connects Abu Dhabi with the Gulf of Oman and can transport as much as 1.8 million barrels of crude per day without requiring passage through Hormuz.

The UAE is considering additional infrastructure investment that would increase its bypass capacity as it works toward a production target of 5 million barrels per day next year. The country recently left the Organization of the Petroleum Exporting Countries (OPEC), removing the production quota that had limited its output to around 3.5 million barrels per day.

Saudi Arabia’s experience, meanwhile, demonstrates that bypass infrastructure does not eliminate exposure to regional security risks. Riyadh uses the 1,200-kilometer East-West Crude Oil Pipeline to move as much as 7 million barrels per day to Yanbu on the Red Sea.

Attacks by Iran-backed Houthi forces on September 11 damaged pumping stations along the system, prompting Saudi Aramco to suspend the pipeline and cancel October deliveries to at least two European refineries. Saudi Arabia subsequently increased shipments through Hormuz to maintain contractual commitments, with daily volumes rising from about 700,000 barrels in August to 2.9 million barrels this month.

Limited pipeline operations have since resumed, but repairs to damaged pumping stations could take up to eight weeks, according to experts. The incident has therefore highlighted the continuing security risks surrounding even major alternative export corridors.

Oman emerges as a regional transit hub

Oman has benefited from its geography, with the ports of Sohar, Duqm and Salalah positioned along the Arabian Sea beyond the Strait of Hormuz. These facilities have provided an alternative maritime platform for Gulf producers and have supported ship-to-ship transfers of crude during the disruption.

The wider economic impact has been substantial. Oil exports from Gulf countries dependent on Hormuz declined 36.4% during the first month of the crisis, producing an estimated $15.2 billion loss in oil revenue, according to the Turkish Center for Energy Strategies and Policy Research (TESPAM).

A recent analysis by the Baker Institute, a Texas-based policy research institution, similarly found that countries without alternative export infrastructure experienced the most severe economic consequences. Kuwait, Qatar and Bahrain have consequently emerged as the Gulf states most exposed to the continuing disruption around the strategic waterway.