The blockading of the Strait of Hormuz was something that was never going to happen—until it did, paralyzing a fifth of global LNG and crude oil flows and causing quite a bit of economic pain to both producers and consumers of energy commodities. Now, they are taking care to never let a disruption of that scale happen again.
The most immediate response to Iran’s closure of the strait was switching to alternative pipeline routes for those that had them. Saudi Arabia demonstrated foresight with its East-West pipeline that it used to reroute its export flows from the Persian Gulf to the Red Sea, ramping up to some 7 million barrels of crude daily along the pipe that had previously handled much lower volumes. The only major constraint in that rerouting was the capacity of the loading facilities at Yanbu Port, an issue Aramco will no doubt address soon.
It is worth noting that the risk of Iran closing off the Strait of Hormuz was precisely what made Saudi Arabia decide to build the East-West pipeline in the first place, back in the 1980s, as Reuters’ energy columnist Ron Bousso noted in an overview of alternative oil and gas routes out of the Middle East in the aftermath of the Hormuz crisis.
Meanwhile, its neighbor and former fellow OPEC member, the UAE, will have to build a new pipeline to insulate itself from potential future Hormuz trouble. The country already has one pipeline that ships oil to the port of Fujairah, which sits right outside the Strait of Hormuz, but it now plans to double its capacity with a new pipe, from 1.8 million barrels daily to 3.6 million barrels daily—and it wants to do it fast. The new pipeline is scheduled to be ready by the end of next year.
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