How Gulf States Are Racing to Bypass the Strait of Hormuz

Gulf states are urgently expanding existing pipelines and developing new overland export routes to bypass the Strait of Hormuz after months of conflict-driven shipping disruptions. The June 18, 2026 U.S.-Iran ceasefire led to the formal reopening of the waterway, but confidence remains fragile—shippers are cautious, insurance markets need time to recalibrate, and infrastructure investments are accelerating regardless of the truce .

The June 18 ceasefire has formally reopened the Strait of Hormuz and allowed initial tanker transits, but shipping and insurance confidence will take weeks to restore. Meanwhile, Gulf states are pressing ahead with multi-billion-dollar pipeline expansions—Saudi Arabia's Petroline upgrade, the UAE's near-50%-complete Fujairah pipeline, and Iraq's preliminary corridor talks—treating the truce as a temporary reprieve rather than a reason to halt long-term diversification of export routes .

Key Pipeline Bypass Projects

Saudi Arabia – East-West Pipeline (Petroline)

Capacity: The East-West pipeline, also known as Petroline, spans approximately 1,200 kilometers (about 750 miles) across Saudi Arabia, linking the Eastern Province oil fields to the Red Sea port of Yanbu. Following recent enhancements, the pipeline boasts an estimated capacity of 7 million barrels per day (bpd) . During the crisis, it became Saudi Arabia's primary alternative export route, running at full capacity with Yanbu exports reaching around 5 million bpd .

Status: Already operational, the Petroline is a critical asset built in the 1980s to address previous disruptions. However, it can cover only about two-thirds of the kingdom's typical Hormuz transit volumes .

Expansion: Saudi Aramco is actively studying a major capacity upgrade to push the pipeline beyond its current limit, assessing capacity increases and terminal expansions to effectively debottleneck exports .

UAE – Abu Dhabi Crude Oil Pipeline (ADCOP) / West-East Pipeline

Capacity: The Abu Dhabi Crude Oil Pipeline (ADCOP), also referred to as the Habshan-Fujairah pipeline, runs 380 kilometers from the Habshan oil fields to the eastern port of Fujairah on the Gulf of Oman, completely bypassing the Strait of Hormuz. Its current capacity is approximately 1.5 million bpd . The UAE has also built 42 million barrels of underground storage at Fujairah .

New Expansion: In May 2026, Crown Prince Sheikh Khaled bin Mohamed bin Zayed announced an accelerated expansion of the West-East Pipeline initiative to address "global demands," targeting a doubling of Fujairah export capacity by 2027 . ADNOC CEO Sultan Al Jaber confirmed in an interview with the Atlantic Council that the project is already nearly 50% complete, stating "Currently, an excessive portion of the global energy supply traverses a limited number of chokepoints" .

Refined Products Pipeline: The UAE is also finalizing its first dedicated refined products pipeline to Fujairah, announced in early June 2026. This overland pipeline will export gasoline, diesel, and aviation kerosene, addressing refined product export bottlenecks caused by the Strait's restricted navigation .

Iraq – Basra–Haditha–Aqaba / Strategic Pipeline Projects

Existing infrastructure: The Iraq–Turkey Pipeline (via Kirkuk–Ceyhan) offers limited bypass capacity but has been frequently disrupted by political and security issues .

New proposals: Talks are advancing on a pipeline from Iraq through Saudi Arabia and Jordan to the Red Sea port of Aqaba, as well as a broader pipeline network running from Iraq to Oman via Gulf states . A pipeline network running from Iraq to Oman via Gulf states to bypass both the Strait of Hormuz and Bab el Mandeb is estimated to cost up to $55 million .

Major hurdle: Iraq's bypass options are the least developed among the three major Gulf producers. Any new pipeline faces significant political, security, and financing obstacles, and experts warn that Iraq's plans remain far from materialization .

Other Export Strategies

• Iraq–Oman–Gulf corridor: A conceptual multi-state pipeline network that would connect Iraqi oil fields to Omani ports on the Arabian Sea, bypassing Hormuz entirely .
• Mediterranean corridor: Some reports indicate Gulf states are exploring a politically sensitive overland route to Israel's port of Haifa on the Mediterranean, though this faces major diplomatic hurdles and has not been formally confirmed .
• Floating storage and ship-to-ship transfers: During the closure, these were used as tactical workarounds but are not considered a long-term strategic solution .

The June 18 Ceasefire and Near-Term Confidence

What happened on June 18:

• The U.S. and Iran signed a Memorandum of Understanding (MoU), and U.S. Central Command declared the naval blockade lifted, stating "Hormuz is international waters. Transit is free" .
• By the evening of June 18 and into June 19, the first Saudi-owned crude tankers since February 28 transited the strait, carrying an estimated 10 million barrels of oil in the first 24-hour window . The U.S. permitted at least 12 vessels to pass through its blockade, according to Vice President J.D. Vance .

Confidence is rebuilding slowly:

• Shippers in Asia and Europe have said it could take weeks to rebuild confidence and resume normal navigation, even with the ceasefire in place . Recovery requires demining, normalization of insurance rates, and sustained safe passage .
• Insurance markets remain cautious; war-risk premiums on Hormuz transits fell after the deal but have not normalized, and insurers want to see sustained safe passage before adjusting rates .
• On June 20—just two days after the reopening—Iran reportedly announced the strait was closed again, cautioning vessels to avoid the route. The U.S. denied the closure and maintained the waterway remained accessible . This contradictory signal underscores the fragility of the ceasefire arrangement.

Long-term infrastructure investments continue:

• Experts widely agree that even with a ceasefire, Gulf states cannot fully rely on Hormuz remaining open, and the strategic imperative to build bypass capacity is now embedded in national energy policy . Badr Jafar, the UAE's special envoy for business and philanthropy, wrote in the Financial Times that Gulf states would never "return to a posture of strategic dependence on a narrow strait controlled by an unpredictable neighbour" .
• The UAE's accelerated pipeline expansion and Saudi Arabia's study of Petroline upgrades prove that investment momentum has not slowed despite the truce .
• Analysts caution, however, that new pipelines are very costly, take years to complete, and will at best reduce—not eliminate—Hormuz dependence. The strait handles roughly 20 million bpd of oil and gas, approximately one-fifth of global consumption, and overland routes cannot match maritime shipping capacity .

Bottom line: The June 18 ceasefire has formally reopened the Strait of Hormuz and allowed initial tanker transits, but shipping and insurance confidence will take weeks to restore. Meanwhile, Gulf states are pressing ahead with multi-billion-dollar pipeline expansions—Saudi Arabia's Petroline upgrade, the UAE's near-50%-complete Fujairah pipeline, and Iraq's preliminary corridor talks—treating the truce as a temporary reprieve rather than a reason to halt long-term diversification of export routes.