Two pipelines built just for the occasion—one in Saudi Arabia and one in the United Arab Emirates—bypass the Strait of Hormuz. They are the only ways to get a significant amount of oil out of the Persian Gulf into world markets.
The pipes can’t replace the flows carried by tanker ships, but their use is almost all that is preventing an even worse crisis from unfolding. Saudi Arabia in particular is pumping as much crude as possible through its pipeline to its Red Sea port of Yanbu, built in the early 1980s when the Iran-Iraq War threatened shipping in the Persian Gulf.
“While we have faced disruptions in the past, this one by far is the biggest crisis the region’s oil-and-gas industry has faced,” said Amin Nasser, Saudi Aramco’s chief executive, on Tuesday.
The shipping blockage has made Saudi Arabia’s East-West pipeline one of the most critical pieces of infrastructure in the world economy. The state oil producer expects to send a maximum of 7 million barrels of oil through the 746-mile-long pipeline within a few days, Nasser said.
About 2 million barrels of oil are dedicated to Saudi refiners, leaving 5 million barrels that could reach global markets each day. That is equal to most of Saudi Arabia’s crude shipments through the strait in the run-up to the war, according to the International Energy Agency.
It is a big test of the infrastructure. The pipe has never run at full capacity for an extended period, the IEA said. And it doesn’t fix the whole problem: Aramco sends 800,000 barrels daily of petroleum products through the strait, which can’t be rerouted. Plus, there is the oil stranded in Kuwait, Iraq and Bahrain.
To boot, Iran has attacked energy infrastructure across the Gulf in an attempt to drive up prices for American voters. Analysts say there isn’t much to stop Tehran from targeting the Saudi and Emirati pipelines.
As long as oil is flowing through them, at least some crude can reach buyers while more than 1,000 ships are stuck in the Persian Gulf. The smaller Emirati pipeline transports crude from Abu Dhabi to the port of Fujairah on the Gulf of Oman.
“If you suddenly see two very large crude carriers coming out of Yanbu and one out of Fujairah, there is a psychological effect that at least some oil is coming out,” said Adi Imsirovic, a former trader and lecturer at the University of Oxford. “What really worries me is that it’s not particularly difficult to target those pipelines.”
Crude prices fell Tuesday, extending a retreat sparked by President Trump’s comment that the war would be over “very soon.” Brent, the global benchmark, is still 27% higher than on the eve of the war.
One sign buyers are desperate to get their hands on crude that can bypass Hormuz is the fact that prices on either side of the strait have gone haywire. Crude loaded from Oman trades at a premium to a flavor known as Dubai, which can’t be diverted from the port of Fateh on the wrong side of the passage.
A tanker belonging to daredevil Greek shipowner George Prokopiou is among the few Western ships to have sailed out through the passage since the war began, according to data firm Kpler. It was carrying Saudi crude and sailed through Hormuz with its signal off.
Oil flows through the waterway ticked higher Monday, Goldman Sachs analysts said in a note, counting the number of vessels at 20% of prewar daily rates. The bank cautioned that the data can be noisy and that tanker traffic has become hard to track as vessels turn off their transponders to avoid detection.
Other European tanker executives with ships in the region said they still didn’t feel confident sending them through the strait.
Snaking through dunes, mountains and lava fields, the pipeline carries oil from huge fields in eastern Saudi Arabia to the country’s Red Sea Coast. It is roughly the same length as the Trans-Alaska Pipeline.
Around 7,000 workers toiled on the four-year project, overseen by a division of Mobil Oil, an in-house Aramco newsletter reported in 1983, two years after the first shipment. For a parallel pipe dedicated to natural-gas byproducts, workers blasted a trench across the Arabian Peninsula with 2,000 tons of explosives.
The artery was conceived as a way to dodge the Persian Gulf and bring Saudi exports closer to Western markets. These days, most Saudi oil exports head to Asia.
Even more oil might have been able to head out via the Red Sea had another pipeline not fallen hostage to regional hostilities. At the start of 1990, Iraq and Saudi Arabia opened a massive pipeline that was supposed to take Baghdad’s crude all the way to Yanbu. Seven months later, Saddam Hussein invaded Kuwait and the pipeline never took off.
Daily exports out of Yanbu have risen by 2 million barrels a day over the past week, said Vikas Dwivedi, global energy strategist at Macquarie. He estimates that the pipe was running at 50% to 60% capacity as of Monday.
A smaller, newer Emirati pipeline, partially built by a subsidiary of state-owned China National Petroleum Corp., runs from Habshan in Abu Dhabi to Fujairah on the Gulf of Oman. It carries up to 1.8 million barrels a day and was already pushing about 1.1 million barrels through before the war, according to the IEA.
Crude loadings at both Yanbu and Fujairah have jumped. Petrobras, the Brazilian state-backed oil company, said Saudi Arabia has satisfied its commitment by sending oil through the pipeline. The only problem for Petrobras now, said its chief executive, is the increase in shipping costs.
A back-of-the-envelope calculation suggests that even with the pipeline flows, there are still around 10 million barrels that will be stuck in the Persian Gulf, according to analytics firm Sparta Commodities. “We’ve basically solved half of the problem,” said Neil Crosby at Sparta.
Though safer than heading into the Persian Gulf, loading oil in the Red Sea and at Fujairah isn’t risk free. The Emirati port was damaged by an attempted drone attack last week, which prompted some fuel suppliers there to back out of contracts.
Iran-aligned Houthi rebels in Yemen launched dozens of attacks on commercial ships in 2024. Though they haven’t restarted the campaign during the current war, maritime security analysts at U.K.-based Ambrey are advising ships tied to the U.S. and Israel to avoid the Red Sea.
Iran itself built a pipeline to get around the Persian Gulf to the port of Jask on the Gulf of Oman. A supertanker capable of carrying 2 million barrels of crude loaded at the port over the weekend, according to Kpler. It was only the third cargo to set sail from Jask since 2021.
Write to Joe Wallace at joe.wallace@wsj.com and Rebecca Feng at rebecca.feng@wsj.com
