The Gulf’s Oil Escape Plan: Bypassing the Strait of Hormuz (Explained Simply)

Imagine a narrow driveway that almost all the oil trucks from a neighborhood must use to leave. If someone blocks it or charges a toll, the whole neighborhood has a problem. That’s what the Strait of Hormuz is for the Persian Gulf — a slim waterway that a huge amount of the world’s oil must pass through.

Recently, big troubles have made this “driveway” risky.

What’s Going On? (The Background)

• President Donald Trump threatened to impose a 20% fee on cargo ships passing through the Strait of Hormuz (reported July 13, 2026).
• Renewed U.S.–Iran tensions have made the area even more dangerous.
• Because of attacks and shipping disruptions, Gulf countries are urgently looking for alternative routes to keep their oil moving.

Important Point: The Strait of Hormuz is a tiny chokepoint. If it gets blocked or too risky, oil prices and global supplies can be badly shaken.

How Are Gulf Countries Trying to Bypass the Strait?

Here are the main tricks they are using or building, explained like you’re five:

1. Saudi Arabia’s “Cross‑Country” Pipeline (The East‑West Pipeline)

• Saudi Arabia has a pipeline nicknamed Petroline (officially the East‑West pipeline network).
• It is about 750 miles long (like a very long garden hose) and carries oil from Abqaiq on the eastern Gulf coast to the port of Yanbu on the Red Sea.
• Its total design capacity is about 7 million barrels per day (a barrel is 42 gallons; think of a giant bathtub of oil every single day).
• According to Andy Lipow, president of Lipow Oil Associates, Saudi Arabia is currently diverting roughly 4 million barrels a day through this pipeline to Yanbu, where tankers load and then sail out via the Red Sea.
• Bob McNally, president of Rapidan Energy Group, called this a “major success” and a “real master stroke” because it keeps oil flowing despite the Hormuz risk.

2. The UAE’s Plan for a New Port Outside the Strait

• The United Arab Emirates (UAE) is looking to build a new port and container terminal on its east coast in the area of Fujairah.
• This would let them bypass the Strait of Hormuz and rely less on their huge Jebel Ali hub (the biggest logistics center in the Middle East).
• Dubai‑based port operator DP World is reportedly in talks to develop the port and a new terminal at the existing Fujairah harbor (Financial Times reported this on Monday, citing unnamed sources). DP World declined to comment to CNBC.
• Ahmed bin Sulayem, chief executive of the Dubai Multi Commodities Centre, said these reports show both an “immediate action” and “also a medium‑ and long‑term plan.” He told CNBC on Tuesday:
  

  “Until conditions in the Strait of Hormuz are safer, as of now, I don’t believe there will be much focus on shipping lines going there.”

3. The UAE’s “Oil Shuttle” Trick

• Analysts say the UAE has also chartered its own tankers to shuttle crude from inside the Strait of Hormuz to waters just outside it.
• There, the oil is transferred to larger ships that can deliver it to Asia.
• Lipow explained this helps “maintain UAE sales” and “get oil into the market to these countries that need it.”

4. The Positive Surprise

• McNally noted that with help from the U.S. military, the UAE is getting back to pre‑war levels of oil movement, which he called “really quite a positive surprise.”

Greater Bargaining Power

Carole Nakhle, CEO of Crystol Energy, pointed out that the UAE has moved faster than many neighbors to build alternatives, and this changes the political game:

• The quicker a country reduces its need for the Strait, the more bargaining power it has in deals with Iran.
• She said: “The second they reduce that kind of exposure to the Strait of Hormuz, the more bargaining power they will have in any potential deal with the Iranians, and that by itself is going to deflate some of the Iranians’ power and influence in the region.”

Important Point: Building alternatives isn’t just about oil safety — it’s also about who holds the stronger cards in diplomatic fights.

But the Risk Doesn’t Disappear — It Moves!

Bypassing Hormuz does not remove danger; it just shifts it to other waterways.

• Tankers leaving Saudi Arabia’s Yanbu port must travel through the Red Sea and pass the Bab el‑Mandeb Strait.
• That area has seen attacks by Houthi forces, which could threaten another key corridor.
• Lipow warned that any attempt to stop those vessels could remove several million more barrels a day from the market.

So, the problem is like squeezing a balloon: push in one spot, it bulges in another.

What About Other Gulf States?

Not every country in the Gulf has good alternatives yet.

• Kuwait, Iraq, and Qatar still rely heavily on the Strait of Hormuz.
• The International Energy Agency (IEA) says only Saudi Arabia and the UAE have working crude pipelines that bypass Hormuz, with about 3.5 to 5.5 million barrels per day of spare capacity.
• Other exporters — including Iraq, Kuwait, Qatar, Bahrain, and Iran — depend on the waterway for the vast majority of their oil shipments.
• If the strait were closed for a long time, alternative pipelines couldn’t carry all the stranded crude and liquefied natural gas.

Lipow added that Saudi Arabia, Kuwait, and Iraq might have to reverse recent production increases if storage tanks fill up and empty tankers can’t reach export terminals.

How Long Until Real Alternatives Exist?

Adam Posen, president of the Peterson Institute for International Economics, says building enough pipelines, shipping routes, and other workarounds will take time:

“It will take a sustained problem of this sort, another 18 to 24 months before you get the workarounds built, the various pipelines, the alternative shipping, the alternative sources.”

Summary

• Trump’s 20% fee threat and U.S.–Iran tensions have pushed Gulf nations to find oil export routes that avoid the Strait of Hormuz.
• Saudi Arabia is using its East‑West pipeline to send ~4 million barrels/day to the Red Sea; UAE is planning a new port in Fujairah and shuttling oil with chartered tankers.
• These moves give the UAE more bargaining power against Iran and keep some oil flowing, but they shift risk to places like the Bab el‑Mandeb Strait.
• Most other Gulf states (Kuwait, Iraq, Qatar, etc.) still depend on Hormuz, and only limited bypass capacity exists.
• Experts estimate it will take 18 to 24 months to build enough alternatives to seriously reduce reliance on the strait.

FAQ

Q1: What exactly is the Strait of Hormuz?
A: It’s a narrow strip of water between Iran and Oman that connects the Persian Gulf to the open ocean. A huge share of the world’s oil shipments must pass through it — like a single narrow door for a giant warehouse.

Q2: Why is Trump’s proposed 20% fee such a big deal?
A: A 20% fee on cargo passing through the strait would make oil shipping much more expensive, encouraging countries to avoid the area altogether and sparking a rush to find other routes.

Q3: Can pipelines completely replace the Strait of Hormuz right now?
A: No. Only Saudi Arabia and the UAE have operational bypass pipelines, with a combined spare capacity of about 3.5–5.5 million barrels per day. That’s not enough to cover all the oil and gas that normally flows through Hormuz, especially for Kuwait, Iraq, and Qatar.

Q4: If they bypass Hormuz, is the oil safe?
A: Not totally. The alternative routes (like the Red Sea and Bab el‑Mandeb Strait) have their own dangers, such as Houthi attacks. So the risk moves rather than vanishes.

Q5: How soon could the Gulf be independent from Hormuz?
A: According to economist Adam Posen, it could take 18 to 24 months of sustained effort to build the needed pipelines, ports, and shipping workarounds.