How Saudi Arabia and the UAE Are Rewriting the Rules of Gulf Oil Exports After the Hormuz Crisis

The closure exposed the stark vulnerability of Gulf producers that depend on Hormuz for their exports. While Saudi Arabia and the UAE had built bypass pipelines decades ago, Kuwait, Qatar, and Bahrain had no alternative routes at all. The crisis turned those pipelines from insurance policies into lifelines — and ignited a race to expand them.

Saudi Arabia's Petroline Expansion Plan

On July 7, 2026, Reuters reported exclusively that Saudi Arabia is considering expanding the capacity of its East-West crude oil pipeline to the Red Sea by up to 2 million bpd, citing five sources close to the matter. The existing system, built in the early 1980s, runs approximately 1,200 km from Abqaiq in the Eastern Province to the Red Sea port of Yanbu. Its current capacity is 7 million bpd, of which roughly 2 million bpd feeds domestic refineries on the west coast, leaving about 5 million bpd for export.

The expansion would add 1–2 million bpd of new capacity, though Reuters emphasized the plan is still under consideration and any cost estimates, construction schedules, or final investment decisions remain uncertain. Crucially, the plan includes preliminary talks with neighboring countries about accessing the expanded route.

Why This Matters for the Region

Kuwait, Qatar, and Bahrain have no oil export routes that bypass Hormuz — they are entirely dependent on the strait. Kuwait is actively seeking alternatives. On June 9, 2026, Kuwait Petroleum Corp. CEO Sheikh Nawaf Al-Sabah confirmed his company is in talks with Saudi Arabia and the UAE about expanding their pipeline systems to handle Kuwaiti barrels. He did not specify how far advanced those talks were.

By allowing neighbors to ship through Saudi territory to Yanbu, Riyadh could gain significant influence over regional energy flows while solving a shared export bottleneck — a shift Reuters has described as one that "will reshape the region."

The UAE's Fujairah Pipeline: Faster and Further Along

The UAE has moved more quickly than Saudi Arabia on its own bypass capacity. The country already operates the Abu Dhabi Crude Oil Pipeline (ADCOP), a 360–400 km route from Habshan to Fujairah on the Gulf of Oman, with a capacity of about 1.5–1.8 million bpd. That pipeline has been critical during the crisis, allowing the UAE to continue exporting even as Hormuz traffic halted.

On May 15, 2026, the Abu Dhabi Media Office announced that construction of a second pipeline to Fujairah — the West-East Pipeline — had been accelerated and was expected to be operational by 2027. By May 20, ADNOC CEO Sultan Al Jaber stated the project was already 50% complete, having begun construction in 2025. Once finished, the new pipeline will double the UAE's crude export capacity bypassing Hormuz.

Saudi vs. UAE: A Comparison

What This Means for Oil Prices

The biggest unanswered question is what happens when Hormuz reopens while new bypass pipelines are also coming online. The EIA and Rystad estimates of 7.5–11.7 million bpd of shut-in or recently shut-in production represent a vast volume of barrels that could return to market if export constraints ease.

Reuters has described the post-Hormuz supply adjustment as a "potentially chaotic rebalancing act." If Hormuz reopens while Saudi Arabia's expanded Petroline and the UAE's second Fujairah pipeline are both operating at high utilization, the market could face a sharp supply increase and downward pressure on prices.

Kuwait and other neighbors add a further wild card. If more Gulf producers gain access to Saudi bypass capacity, additional barrels could be routed to the Red Sea and add to the supply rebound once constraints ease.

The available sources do not contain explicit official statements declaring a coordinated price war or a "race to the bottom" between Saudi Arabia and the UAE. But the structural dynamics are clear: both countries are investing heavily in the same kind of infrastructure, both have large volumes of shut-in production to bring back, and both could find themselves competing for market share in a post-crisis world when global demand growth is uncertain.

A Permanent Shift

Analysts and industry officials have noted that new pipelines alone cannot fully replace the Strait of Hormuz. The waterway's pre-crisis volume of about 17 million bpd of oil and petroleum products dwarfs the combined bypass capacity these projects can add. At best, these pipelines can reduce dependence on Hormuz rather than eliminate it entirely.

But the 2026 crisis has already produced a permanent shift. Saudi Arabia's Petroline went from a rarely-used backup to the kingdom's primary export artery in a matter of days — by late March 2026, it was running at its full 7 million bpd capacity for the first time in history. The UAE's second Fujairah pipeline, which had been planned before the crisis, was accelerated and is now halfway built.

The countries most exposed — Kuwait, Qatar, and Bahrain — are now actively negotiating for access to their neighbors' pipelines in a way that was unthinkable before the crisis. The result may be a physically and geopolitically transformed Gulf oil export system that outlasts the conflict that created it.

This article was sourced and fact-checked using Studio Global's cited-source research tool. All figures and claims are drawn from the provided source list and cross-referenced for accuracy.