While the declaration of a ceasefire between the US and Iran has provided immediate relief to global oil markets, the shocks originating from the Strait of Hormuz are driving Gulf nations to intensify their search for alternative export routes.
In an analysis for Semafor, Amena Bakr, the head of Middle East Energy and OPEC+ research at Kpler, argues that although the ceasefire creates an impression that the worst has passed, the reality is that Iran has established a level of dominance over global oil flows that did not exist prior to the conflict.
According to Bakr, energy exporters in the Gulf are consequently evaluating their options to bypass Tehran’s control.
Flows through the Strait of Hormuz remain significantly below pre-war levels. According to Kpler data, approximately 300 million barrels of crude oil have been lost from the global balance. Across the Gulf, roughly 11.5 million barrels per day (bpd) of production remains offline. Even if the conflict were to conclude today with a permanent peace agreement, oil prices are expected to hover around $90 per barrel.
The reason, according to Bakr, is straightforward: the fighting may have ceased, but the supply shock persists. Approximately 187 tankers carrying nearly 170 million barrels of crude remain stranded in the Gulf. At current rates following the ceasefire, it will take more than two weeks to offload these vessels, and there are few signs that empty tankers are entering the region to take on new cargo.
The author notes that Iran’s Islamic Revolutionary Guard Corps (IRGC) has demonstrated its capacity to disrupt maritime shipping, delay cargoes, and dictate transit conditions. Kpler data indicates that Tehran has targeted ships and ports on at least 21 occasions.
Shipowners informed Bakr that following the ceasefire, their crews received messages stating they must obtain transit permission from the IRGC or face potential attack. Those with vessels currently stranded in the Gulf are avoiding communication with the group for compliance reasons, as the IRGC is sanctioned as a terrorist organization by both the US and the European Union.
Iranian officials maintain that control over the strait was a component of the ceasefire agreement reached with Washington. Meanwhile, US President Donald Trump has repeatedly asserted that his country is not dependent on the waterway and that other nations must step forward to secure the passage.
While some Gulf states are willing to join a coalition to protect the waterway, most have rejected the option of paying transit fees.
Taking a longer-term perspective, Gulf nations are revisiting plans to reduce their reliance on Hormuz. The effectiveness of alternative routes in Saudi Arabia and the United Arab Emirates (UAE) during the conflict has underscored their strategic value.
Expanding pipeline infrastructure is considered critical. The most immediate options involve scaling up existing systems.
Saudi Arabia’s East-West pipeline, which stretches approximately 1,200 kilometers from the Gulf coast to Yanbu on the Red Sea, has a capacity of roughly 7 million bpd. Riyadh is currently weighing capacity increases and terminal expansions to effectively eliminate export bottlenecks caused by the current loading capacity of approximately 5 million bpd. However, these upgrades must be pursued while protecting the existing link, which was damaged in a recent Iranian attack.
The UAE could also expand its route to Fujairah, increasing capacity beyond the Strait of Hormuz from its current level of approximately 1.8 million bpd without facing cross-border infrastructure complications.
Other projects under discussion are more capital-intensive and subject to political considerations. These include the expansion of the Iraq-Türkiye pipeline running from Kirkuk to Ceyhan.
The Basra-Aqaba pipeline to Jordan would provide Iraq with access to the Red Sea but faces significant financing hurdles and other challenges. Discussions have also been revived regarding the reopening of a pipeline that once carried Iraqi crude through Saudi Arabia (IPSA); however, its reactivation depends on political agreements that have proven difficult to secure in the past.
Industry discussions are increasingly focused on building multiple routes rather than relying on a single alternative. A networked pipeline system would allow flows to be diverted during disruptions, reducing dependency on any single corridor.
Nevertheless, the obstacles remain substantial. New pipelines require tens of billions of dollars in capital and years of construction, while also contending with difficult terrain and security concerns.
The historical lack of cross-border energy infrastructure in the region is largely due to projects becoming stalled by disputes over ownership, tariffs, and operations.
Despite these hurdles, Bakr argues that the economic calculus is shifting. Disruptions, surging insurance costs, and uncertainty over access have paralyzed energy and trade flows. For Gulf producers, investing in alternative routes is becoming vital to maintaining access to global markets.