Saudi Arabia Plans to Expand Oil Pipeline to Bypass Strait of Hormuz Amid Iran Tensions

Saudi Arabia is considering expanding its oil pipeline capacity to bypass the Strait of Hormuz, a strategic move in response to the ongoing oil crisis triggered by Iran's blockade of the strait. The expansion would increase the pipeline's capacity by an additional 2 million barrels per day to the Red Sea coast, allowing Saudi Arabia to export more oil without relying on the Hormuz passage, which Iran controls.

The pipeline, known as the East-West pipeline, currently transports up to 7 million barrels per day to the Yanbu port on the Red Sea, with 2 million barrels directed to Saudi refineries and 5 million for export. The project, first reported by Reuters, is expected to take several years and cost billions of dollars. Saudi Arabia is in preliminary talks with neighboring countries about the expansion, which may involve upgrading existing infrastructure or building a new pipeline. There is also consideration for a smaller secondary pipeline to transport refined petroleum products.

This development comes amid heightened regional tensions and competition in the oil sector, particularly between Saudi Arabia and the United Arab Emirates (UAE). The UAE is also enhancing its capacity to bypass the Strait of Hormuz with a new pipeline expected to double its export capacity to the port of Fujairah by next year. Currently, the UAE's existing pipeline can transport up to 1.8 million barrels per day.

Iran's blockade of the Strait of Hormuz has forced Gulf oil producers to reduce output by up to 12 million barrels per day, causing a spike in global oil prices. Although a recent preliminary agreement between the US and Iran has partially restored oil flow, volumes remain below pre-conflict levels. The rivalry between Saudi Arabia and the UAE may intensify into a race to increase oil production and potentially lower prices, according to sources familiar with the situation.

The expansion of Saudi Arabia's pipeline capacity aims to secure alternative export routes and reduce vulnerability to disruptions in the Strait of Hormuz, a critical chokepoint for global oil trade.