Saudi Arabia Is Studying an Expansion of Its Red Sea Oil Pipeline to Cut Reliance on the Strait of Hormuz
Saudi Arabia is considering expanding the crude-oil pipeline that carries its oil across the country to the Red Sea, a route that bypasses the Strait of Hormuz, Reuters reported on Tuesday, citing five sources close to the matter. The move, described as preliminary, would let the kingdom, and potentially its neighbours, export more oil without passing through the strait, the world’s most important oil chokepoint. Saudi Aramco declined to comment and there has been no official statement from the company or the energy ministry, so the plan should be read as a study rather than a confirmed decision.
The pipeline in question is the East-West line, known as Petroline, which runs from the oil-rich Eastern Province to the Red Sea port of Yanbu. It can carry up to 7 million barrels a day, of which about 2 million supply refineries on the west coast and about 5 million are available for export, according to figures Aramco’s chief executive gave in May. The sources told Reuters the kingdom is looking at raising capacity by up to 2 million barrels a day, with a range of 1 million to 2 million under discussion, and is also weighing a separate, smaller line for refined products. It is not clear whether that would mean upgrading existing infrastructure or building a new pipeline; either way, the sources said, it would take years and cost billions of dollars.
The strategic logic is straightforward. The Strait of Hormuz, the narrow waterway between the Gulf and the Gulf of Oman, carries around 20 million barrels a day of crude and products, close to a fifth of world oil consumption and roughly a quarter of all seaborne-traded oil, according to the US Energy Information Administration and the International Energy Agency. Any pipeline that moves crude to a Red Sea terminal west of the strait reduces exposure to disruption there. That exposure has been in sharp focus: shipping through Hormuz was severely disrupted earlier in the year, and tankers were again attacked in the strait this week, reviving the security premium in oil prices.
The numbers show why the route matters and why the expansion would be significant. Petroline’s roughly 5 million barrels a day of spare export capacity already equals about a quarter of the crude and products that normally move through Hormuz, our calculation, and an increase of 1 to 2 million barrels a day would lift the pipeline’s total capacity by roughly 14 to 29 percent from 7 million, our calculation. Even at the top of that range, however, the route would still carry only a fraction of the volume that transits the strait, underlining that pipelines can mitigate but not fully replace the waterway.
The question is regional as much as national. Kuwait, Bahrain and Qatar have no comparable route to bypass Hormuz, and Kuwait Petroleum Corporation’s chief executive said at the Atlantic Council’s Global Energy Forum in June that Kuwait was in talks with Saudi Arabia and the United Arab Emirates about expanding pipeline systems to accommodate Kuwaiti barrels. The United Arab Emirates is the only other Gulf producer with a meaningful alternative: it has completed part of a new west-to-east line that would double crude capacity at its Fujairah terminal on the Gulf of Oman when it comes on stream, on top of an existing Abu Dhabi pipeline that can carry up to 1.8 million barrels a day. A larger Saudi Red Sea route could therefore become shared regional infrastructure, though the sources cautioned that expanding it would also require changes to the way Saudi crude is priced.
Why it matters: For the Gulf, the security of oil exports ultimately rests on a single waterway, and this week’s attacks in the Strait of Hormuz are a reminder of how concentrated that risk is. A larger Red Sea pipeline would give Saudi Arabia, the world’s biggest crude exporter, a way to keep more barrels flowing if the strait is disrupted, strengthening its position as a reliable supplier and potentially offering a partial outlet to neighbours that have none. For Kuwait and the smaller Gulf producers, the study underlines both their vulnerability to a Hormuz shock and their dependence on Saudi infrastructure for any alternative.
Outlook: The plan is at an early stage and, on the sources’ account, would take years to build, so the near-term significance is as a signal of intent rather than an immediate change to export capacity. The markers to watch are any official confirmation from Aramco or the energy ministry, the security situation in the Strait of Hormuz, and whether Gulf neighbours formally seek access to the route. For now it is a study, and should be treated as one.
Sources: Reuters; US Energy Information Administration; International Energy Agency.
