Procrastination on a Global Scale: The Race to Bypass Hormuz

Anne Jacob | Middle East Fellow

Image sourced from Jason R. Zalasky via Wikimedia 

“The world oil market is one market, and should Persian Gulf oil supplies be disrupted or stopped, then oil prices would rise for everyone… regardless of their sources of supply at the time.”

These words were spoken in 1987 by then-US Secretary of Defence, but they could have been spoken today. The prescience of this warning raises an uncomfortable question: if the vulnerability of the Strait of Hormuz was understood nearly 40 years ago, why was so little done to reduce it?

Saudi Arabia, Iraq, the United Arab Emirates (UAE) and their neighbours have spent four decades exporting much of their oil and gas through a single waterway, fully aware that a closure would be catastrophic, and only partially building the infrastructure that would let them survive one. The current disruption of the Strait of Hormuz is not evidence of an unforeseen crisis, but the arrival of a bill that has been accumulating since the 1980s.

This is the story of that unpaid bill: pipelines built but never finished or sized to matter, and Saudi Arabia’s attempt to turn forty years of near misses into a permanent land bridge for Gulf energy. The lesson is clear: geopolitical resilience is built decades before a crisis, not during one.

When Plan B Becomes Plan A

It is not that nothing was done. Three attempts illustrate why acknowledging a risk and insuring against it are very different things.

The most successful attempt was Saudi Arabia’s East-West Crude Oil Pipeline, known as Petroline, built by Petromin amid the Iran-Iraq war. It runs roughly 1,200 kilometres from the Abqaiq oil field in the Eastern Province across the Arabian Peninsula to Yanbu on the Red Sea, giving the kingdom a route to international markets that never comes near the Strait. On paper, its capacity is large. In practice, only seventy percent of that capacity reaches export terminals, since the rest is committed to refineries in western Saudi Arabia.

This matters, because immediately before the current disruption, roughly eight in every nine barrels Saudi Arabia exported were still moving through Hormuz. A direct Hormuz transit toward Asia has always been cheaper, faster and commercially simpler than sending it around Bab el-Mandeb or the Cape of Good Hope. Since the closure, Aramco has redirected customers to Yanbu and reported quarterly profits up 33 percent due to increased oil prices, with the pipeline allowing exports to continue.

Iraq’s experience shows the opposite: proposals that never got built at all. An Iraq-Jordan pipeline to the Red Sea port of Aqaba was stalled for decades even though it held in-principal approval, due to financing gaps, security concerns and unresolved political coordination. A separate line from Iraq to Syria’s Mediterranean port of Baniyas built in the 1950s fell dormant amid regional conflict and is only now being revived under a deal Iraq signed with Syria this year. A third route, the 1970s Kirkuk-Ceyhan pipeline to Turkey, had repeatedly been shut down by disputes between Baghdad and the Kurdistan Regional Government, leaving Iraq’s oil sector, which accounts for roughly 90 percent of state revenue, dependent on its southern Gulf export infrastructure around Basra that sits well within range of Iranian missiles.

Pakistan’s experience shows a third failure: a project killed by politics rather than engineering or cost. The Iran-Pakistan gas pipeline was proposed in 1994 to carry Iranian gas overland to Pakistani consumers. Iran built its section; Pakistan, under the weight of US sanctions risk, never completed its own, and now appears ready to abandon the project altogether. Whether that particular pipeline would have altered today’s crisis is genuinely debatable, since Iran is both the supplier that would have filled it and the party currently disrupting the Strait. What it demonstrates more broadly is that sanctions and political rivalry have been just as effective as cost in killing bypass infrastructure across the region.

Saudi Arabia’s Land Bridge

What has changed now is not the risk, but the willingness to insure against it. Saudi Arabia is now in preliminary talks with neighbouring producers about expanding Petroline’s capacity by up to two million barrels per day and developing Yanbu into a genuine export hub. The significance of this goes beyond extra pipeline capacity; if Petroline evolves into shared infrastructure capable of carrying oil from neighbouring Gulf states, Saudi Arabia acquires something more valuable than just more oil flowing through its pipeline, it becomes the land bridge between Gulf producers and the Red Sea, and by extension, global markets that no longer need Hormuz to reach them.

It is a different kind of leverage to the one oil-producing states have traditionally held, and it explains why Saudi Arabia is not the only country racing to build it. The UAE is doubling its own Habshan-Fujairah pipeline capacity to the Gulf of Oman, and Iraq is reviving the Syrian and Turkish routes it neglected for decades.

For decades, redundancy looked like an expensive answer to a hypothetical question. The closure of Hormuz has revealed the far greater cost of not having it. The infrastructure now being rushed into service in the Gulf could largely have existed already. That is the real lesson of Hormuz's disruption; geopolitical resilience is not something governments can improvise once a chokepoint closes, it must be built in the decades when everyone still assumes it will remain open.

Anne Jacob is an Australian-qualified lawyer with experience at a leading international law firm advising on complex commercial litigation, international arbitration and regulatory matters across the energy, oil and gas, and financial crime sectors. She spent six months working in the Middle East where she developed a keen interest in the region's rapid economic and infrastructure transformation, its growing influence in global energy markets, and the legal and policy challenges arising from labour migration.

Her principal areas of interest are public international law, human rights and international dispute resolution. She studied international human rights law at the University of Copenhagen and currently volunteers with legal counsel at Amnesty International Australia. She has contributed to several public interest matters supporting refugees and self-represented litigants.

Disclaimer: The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views and opinions of Young Australians in International Affairs. AI tools were used by this author for grammar checks and idea refinement, but all content is original, and no plagiarism has been used in the preparation of this article.