Circumventing the Strait of Hormuz’ Bottleneck

As Iran threatens to shut the narrow waterway from international oil tankers, what alternatives are there?

As Iran has threatened to shut the Persian Gulf from international oil trade, it’s worth considering what alternatives there are to the Strait of Hormuz.

This narrow waterway, through which passes roughly 40 percent of the world’s seaborn oil transports along with large quantities of liquefied natural gas from Qatar, could be subject to a blockade if the Iranians follow up on their threats.

There are analysts who point out that Iran itself relies heavily on free shipping in the Gulf and will therefore not dare menace it. Oil and petrochemicals account for 85 percent of Iranian exports. China, with a 16 percent share, and India, with 13, are its main costumers. Japan and South Korea also import oil from Iran but have been under pressure from the United States to suspend their trade.

The United States Navy, which has some thirty ships patrolling the Persian Gulf and nearby waters, should be able to break an Iranian blockade but not before oil prices and insurance rates have skyrocketed worldwide.

Rather than trying to prevent ships from transiting the Strait of Hormuz altogether, Iran would more likely harass unfriendly oil tankers with diesel submarines and shore batteries and thus make it nigh impossible for the fourteen supertankers that traverse the strait on average every day to deliver their oil and gas transports to East Asia and the West.

There are a number of oil pipelines running across Saudi Arabia that are no longer in use but may be reactivated in the event of a prolonged naval skirmish in the Strait of Hormuz.

One runs from Basra in the south of Iraq to the port city of Yanbu’ al Bahr in western Saudi Arabia. This IPSA pipeline was deactivated after the Iraqi invasion of Kuwait in 1990. West of Riyadh, it runs parallel to a couple of oil and gas pipelines that cross the entire width of the Arabian peninsula.

Also mothballed is the Trans-Arabian Pipeline or Tapline which used to deliver oil from the Saudi fields across Jordan to Lebanon.

IPSA and Tapline could carry the equivalent of up to two million barrels of oil per day to ports on the Red Sea and Mediterranean coast. Additional oil could be pumped north via the Iraq-Turkey pipeline which terminates in the city of Ceyhan in the Levant but it isn’t linked up to the southern Iraqi oilfields.

According to the United States Energy Information Administration, oil tankers transport roughly seventeen million barrels of oil through the Strait of Hormuz every day. Reactivation of the pipelines would thus compensate for little more than 10 percent of shipping capacity.

The United Arab Emirates are building another alternative and could soon start pumping the equivalent of two and half million barrels of oil per day via the Abu Dhabi Crude Oil Pipeline from the Habshan onshore oil and gasfield to Fujairah outside the Straits and on the Gulf of Oman. That would more than double the alternative transport capacity but still leave the developed world deprived of some 75 percent of Gulf oil imports.