Strait of Hormuz Bypass: Inside the $14M-BPD Pipeline Race Reshaping Global Oil

Gulf oil producers are fast-tracking at least seven new or expanded pipelines — from Iraq’s Kirkuk-Baniyas line through Syria to the UAE’s second Fujairah link — to move up to 14 million barrels a day around the Strait of Hormuz by 2028, after renewed Iranian tanker attacks halved Iraqi output and pushed Brent crude above $84 a barrel.

For decades, the Strait of Hormuz has been the single most consequential 33 kilometres of water in the global economy — the channel through which roughly a fifth of the world’s oil has passed on its way from the Gulf to refineries in Rotterdam, Singapore and Karachi. That geography is now being actively engineered away.

Why this is the story competitors are missing

Most coverage of the Hormuz crisis has focused narrowly on tanker attacks and day-to-day Brent price swings. The bigger, under-reported story is structural: a permanent reshaping of Middle East export infrastructure that will outlast the current conflict and change how nine-market economies — from Pakistan to Singapore to the UK — plan their energy security for the next decade.

What triggered the scramble

Iran’s attacks on commercial vessels this month forced a sharp slowdown in Hormuz shipping, prompting two days of US strikes on Iranian military targets and reinforcing what shipbrokers describe as a “stop-start” pattern of disruption likely to persist (AGBI). The damage to Iraq has been severe: OPEC’s second-largest producer saw output fall from roughly 4.2 million barrels per day in February to about 1.9 million bpd by June, since Baghdad depends almost entirely on its southern Basra terminals with few pipeline alternatives (CNBC).

Brent crude climbed to around $84 a barrel, up from $76 before the latest escalation, according to reporting from Abu Dhabi (The National). Analysts at Goldman Sachs warn prices could push toward $100 or higher if disruptions persist (Carra Globe).

The pipeline build-out, country by country

Iraq–Syria: Washington is backing efforts to revive the Kirkuk-to-Baniyas pipeline to Syria’s Mediterranean coast, dormant since it was damaged during the 2003 US invasion. US energy officials signed a formal agreement in Washington, with Chevron among the companies exploring involvement in construction (Marketplace; Bloomberg). Even fully restored, the line would carry only around 2 million bpd — a fraction of the roughly 20 million bpd that normally transits Hormuz when fully open, but a meaningful hedge nonetheless.

Iraq–Jordan: Baghdad and Amman have revived a 2013-era plan for a pipeline linking Basra to the Jordanian port of Aqaba, discussed at a trilateral meeting involving US special envoy Tom Barrack (The National).

UAE: Abu Dhabi is doubling the capacity of its pipeline to the Port of Fujairah on the Gulf of Oman, which sits outside the strait entirely.

Saudi Arabia: Riyadh is weighing an expansion of its East-West pipeline to the Red Sea port of Yanbu by as much as 2 million bpd.

Taken together, Goldman Sachs analysts estimate the region’s Hormuz-bypass pipeline capacity could exceed 14 million bpd by the end of 2028 — more than 60% of the Gulf states’ pre-war export volume of roughly 23 million bpd (CNBC).

The catch: pipelines aren’t a shield

Analysts caution the infrastructure build-out will not eliminate Iran’s leverage. New pipelines remain just as exposed to the low-cost, asymmetric drone and missile attacks that have already targeted tankers inside the strait, according to shipping analysts quoted by CNBC. Lloyd’s List editor-in-chief Richard Meade notes the disruption has exposed the absence of any durable, long-term framework for managing the strait itself (AGBI).

The nine-market ripple effect

Pakistan is arguably the most exposed of the nine markets in this analysis outside the Gulf itself. Islamabad formally requested Saudi Arabia supply oil via the Red Sea Yanbu route in March, as Karachi refineries scrambled for alternatives to Hormuz-transiting cargo (Carra Globe). Pakistani pump prices have been revised weekly rather than fortnightly to keep pace with volatility, with petrol hitting Rs. 316.15 per litre by mid-July (PetrolPrice.com.pk).

The UAE and Dubai face the sharpest logistics squeeze on the container-shipping side: Jebel Ali, the world’s ninth-largest port and the primary transshipment hub for the Middle East, East Africa and South Asia, is experiencing mounting congestion as vessels reroute around the Cape of Good Hope, adding 10–14 days and materially higher fuel costs to Asia-Europe voyages (Carra Globe).

Singapore, as Asia’s dominant refining and bunkering hub, sits on the receiving end of both higher freight costs and longer transit times for Gulf crude — a dynamic compounding the cost pressures already facing the city-state’s trade-dependent economy.

The UK, as a net oil importer since North Sea output decline, is exposed through global benchmark pricing rather than direct route disruption, but Brent — priced internationally — flows straight into UK pump and industrial energy costs regardless of which pipeline barrels ultimately take.

The bottom line

This is no longer simply a story about tanker attacks — it is the early architecture of a post-Hormuz energy order that Gulf states, Washington and Asian importers alike are building in real time, barrel by barrel, pipeline by pipeline. For businesses and policymakers across the nine markets covered here, the operative question by 2027 will not be whether Hormuz reopens fully, but how much of the world’s oil no longer needs it to.