Saudi Arabia Eyes Major Red Sea Pipeline Expansion to Bypass Hormuz

Saudi Arabia is looking beyond the Strait of Hormuz.

The kingdom is considering expanding the capacity of its East-West crude pipeline by as much as 2 million barrels per day, according to Reuters. It’s a move that would allow more Saudi—and potentially neighboring Gulf—oil to reach global markets without passing through the world’s most strategically vulnerable chokepoint.

The discussions are still preliminary.

After five months of war, tanker disruptions, and Iranian threats to commercial shipping, Gulf producers are treating the Strait as a liability to be reduced.

The existing East-West pipeline, built in the early 1980s, can move up to 7 million bpd from the kingdom’s eastern oil fields to the Red Sea export terminal at Yanbu. During the Hormuz crisis, it became Saudi Arabia’s most valuable piece of energy infrastructure, allowing millions of barrels to bypass the Persian Gulf altogether.

Now Riyadh appears ready to double down.

According to Reuters, Saudi Arabia has already held preliminary discussions with neighboring producers, including Kuwait, about expanding the system. Kuwait has no alternative export route, while Iraq’s pipeline to Turkey remains plagued by outages and political disputes. Qatar, meanwhile, is reportedly studying whether its LNG exports could also benefit from alternative routes through Saudi Arabia.

The project would take years and cost billions of dollars, but recent events have fundamentally changed the calculus.

Traffic through Hormuz has recovered since the U.S.-Iran framework agreement in June, but commercial shipping remains well below pre-war levels. Independent tanker operators continue to face elevated war-risk insurance costs, while Iran has repeatedly insisted it intends to regulate vessel movements and has floated the idea of charging ships for services in the waterway once negotiations conclude.

By Julianne Geiger for Oilprice.com

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