Saudi Arabia is in talks to add as much as 2 million barrels a day of crude pipeline capacity to the Red Sea, five sources said, a move that would structurally reduce reliance on the Strait of Hormuz.
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Saudi Arabia weighs $2B pipeline expansion to bypass Hormuz chokepoint
Saudi Arabia is considering expanding the capacity of its crude oil pipeline to the western Red Sea coast by as much as 2 million barrels a day, five sources close to the matter said, enabling the kingdom and possibly neighboring countries to transport more oil without crossing the Strait of Hormuz.
The East-West pipeline, built in the early 1980s, already carries 7 million barrels a day to the port of Yanbu — roughly 2 million bpd for domestic refining and 5 million bpd for export. The expansion would add capacity equivalent to about 10 percent of the 20 million to 21 million bpd that normally transits the Strait of Hormuz, a chokepoint that Iran blockaded at the onset of the U.S.-Israeli military operation on Feb. 28.
"The recent talks about new pipeline corridors involving Saudi Arabia, Kuwait and Qatar reflect a broader strategic reality — the conflict has focused minds regionally on the perils of relying solely on Hormuz," said Zaid Belbagi, managing partner at London-based Hardcastle Advisory.
Kuwait Petroleum Corp. Chief Executive Officer Sheikh Nawaf al-Sabah confirmed last month that his company is in discussions with Saudi Arabia and the UAE about expanding pipeline systems to accommodate Kuwaiti barrels. The expansion could cost billions of dollars and take years to complete, one source said, with refined products also under consideration. Saudi Arabia is in preliminary talks with some of its neighbors about the potential increase, the sources said, though it remains unclear whether the plan involves upgrading existing infrastructure or building a new pipeline.
The blockade's toll on Gulf production
Iran's closure of the Strait of Hormuz forced Gulf producers to shut in as much as 12 million bpd of output, sending oil prices surging more than 70 percent. Iraqi crude production collapsed to less than 1.5 million bpd from 4.3 million bpd, Kuwait declared force majeure in March, and Bahrain's Sitra refinery was struck by Iranian missiles multiple times. Flows have resumed partially after a preliminary U.S.-Iran deal last month but remain well below pre-war levels.
The UAE, the only other Gulf state with meaningful Hormuz-bypass capacity, is already fast-tracking a second parallel pipeline to the port of Fujairah on the Gulf of Oman that will double its bypass capacity to more than 3 million bpd, with completion brought forward to 2027. Its existing Habshan-Fujairah pipeline already operates at its maximum capacity of 1.8 million bpd.
Qatar, which mainly exports liquefied natural gas, faces greater technical hurdles and is considering several potential alternatives, including a route via Saudi Arabia, three sources said. Iraq's pipeline to Turkey's Mediterranean coast has been dogged by disputes and repeated shutdowns, running well below its capacity.
A race to diversify export routes
An expansion by Saudi Arabia "suggests that after the war, the next phase of the Saudi-UAE rivalry could be a race to the top on oil production, and therefore a race to the bottom on prices," one industry source said.
The push to expand bypass capacity extends beyond the Gulf. The U.S. is backing a broader effort to reshape the regional energy map, including the India-Middle East-Europe Economic Corridor, which could eventually divert about 60 percent of container traffic that currently risks transiting Hormuz. Washington is also working to increase oil flows from the Americas — Venezuela, Argentina and Brazil — as part of a long-term strategy to reduce the strategic importance of the Strait of Hormuz.
For Saudi Arabia, the pipeline expansion aligns with the broader logic of Vision 2030, which has increasingly emphasized infrastructure resilience alongside economic diversification. The East-West Pipeline, approaching a bottleneck even before the conflict, has proven its strategic value during the crisis, and the kingdom is now looking to build on that redundancy.
"The conflict has focused minds regionally on the perils of relying solely on Hormuz," Belbagi said. Iran will retain the ability to disrupt regional shipping, but its leverage over global oil flows is being structurally eroded with every kilometer of new pipeline and port expansion.
This article is for informational purposes only and does not constitute investment advice.
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