Why TotalEnergies Is Still Moving Crude Through Hormuz While Investing in Bypass Pipelines

TotalEnergies CEO Patrick Pouyanné described the Strait of Hormuz as dangerous but not economically impassable for every cargo. The company is still moving some Iraqi and Qatari crude discreetly because producer discounts can more than offset the added cost of freight, insurance and security risk. At the same time, TotalEnergies is investing in export routes designed to make the chokepoint less important over the longer term. 18

The crude-shipping calculation

Pouyanné said moving a very large crude carrier (VLCC) through Hormuz and bringing it back costs roughly $20 million. Spread across a cargo of about 2 million barrels, that works out to approximately $10 per barrel in additional cost. 15

That premium can be absorbed when producers inside the Gulf are desperate to place their oil on the market. Pouyanné said crude was available at roughly $50 to $60 per barrel, rather than at the international Brent price. In that situation, the discount can outweigh the extra freight, insurance and risk costs. 18

The implication is not that the route has become normal. It is that the market is pricing two opposing forces at once: a security premium for getting through Hormuz and a larger discount from producers struggling to export their barrels.

Why refined products face a much worse trade-off

The economics change for gasoline, diesel and other refined products. Product tankers generally carry smaller cargoes than VLCCs, so the cost of a risky voyage is spread over fewer barrels. Pouyanné put the resulting transport cost at about $50 per barrel, making many such shipments uneconomic. 9

That helps explain the split market he described: crude can remain heavily discounted while refined fuels are comparatively tight and expensive. A waterway can therefore be commercially usable for selected crude cargoes without functioning normally for the broader oil trade. 9

The two routes designed to bypass Hormuz

Abu Dhabi to Fujairah: the earlier option

TotalEnergies said it would invest in expanding Abu Dhabi’s west-east crude export pipeline. The route moves oil from Abu Dhabi to Fujairah on the Gulf of Oman, allowing it to reach a seaborne export terminal without crossing the Strait of Hormuz. 6

The expansion is expected to begin operating in 2027. That makes it the nearer-term relief option among the projects discussed, although it serves UAE crude rather than replacing every barrel that currently depends on the strait.

Iraq through Syria to the Mediterranean: the long-term hedge

The second proposal would create a crude route from Iraq through Syria to Mediterranean export facilities. Iraqi barrels could then reach global markets without first traveling through the Gulf and Hormuz. 6

This is a much slower solution. Sources familiar with the plan told Reuters that building the route would require at least four years and cost at least $15 billion. They also said the project would need new pipeline infrastructure rather than simply restoring an old line.

The contrast matters: the Fujairah expansion could add bypass capacity on a 2027 timetable, while the Iraq–Syria route is a multiyear strategic investment whose timing and execution remain uncertain.

Hormuz traffic remains far below normal

The shipping economics are unfolding against a severe reduction in traffic. Kpler data cited by Reuters showed daily commodity-vessel crossings in the single digits on several August dates: seven vessels on August 21, nine on August 20 and eight on August 12.

That is far below the waterway’s prewar traffic levels. Reuters reported that roughly one-fifth of global crude oil and liquefied natural gas shipments had used Hormuz before the conflict began.

The low number of visible crossings also illustrates why “open” and “operating normally” are different claims. Some vessels can still pass, including under military coordination or by using less visible routes, but owners may continue to avoid the waterway because of attacks, threats and uncertainty over access.

Why estimates of remaining oil flows disagree

The volume of oil still leaving the region has become contested. U.S. Energy Secretary Chris Wright said coordinated efforts involving the U.S. military and Gulf allies had enabled almost 9 million barrels per day to leave through Hormuz. Vessel-tracking analysis suggested the observable flow was no more than about half that amount.

Those figures may not measure exactly the same thing. Government statements can include escorted movements, operational estimates or flows that are difficult to observe, while tracking firms rely heavily on vessel movements and transponder data. CNN reported that much of the recent traffic was “dark,” meaning it was not readily visible through standard tracking methods.

The safest conclusion is therefore narrower than either side’s headline number: oil is still moving, but the exact volume is uncertain and the waterway remains heavily disrupted.

What Pouyanné’s position means

Pouyanné’s comments describe a two-track strategy rather than confidence that Hormuz has been safely restored.

• In the near term, TotalEnergies can capture an arbitrage opportunity by buying deeply discounted crude and paying the extra cost to move selected cargoes through the strait. 18
• For refined products, the smaller cargo sizes make the same risk premium much harder to justify. 9
• By 2027, the expanded Fujairah route could provide additional UAE export capacity outside Hormuz.
• Over a longer horizon, the Iraq–Syria pipeline would offer Iraq a Mediterranean outlet, but its projected cost and construction timeline show that it is not an immediate fix.

The broader lesson is that a chokepoint can remain commercially exploitable without being secure. TotalEnergies is using the crude discount while it exists, but its pipeline commitments show that the company is planning for a market in which relying on Hormuz carries a structural—not merely temporary—risk.