Saudi Arabia is considering expanding the capacity of its East-West oil pipeline to transport more crude oil to the Red Sea coast, thereby bypassing the Strait of Hormuz. Five sources familiar with the matter disclosed this information to Reuters. If implemented, this expansion could enable not only Saudi Arabia but also several neighboring Gulf states to export larger volumes of oil without relying on the Strait of Hormuz.
Constructed in the early 1980s, the East-West pipeline has gained strategic importance following the outbreak of the Iran-Iraq War and the subsequent disruption of shipping through the Strait of Hormuz. Currently, the pipeline has a maximum capacity to transport 7 million barrels of crude oil per day to the Red Sea port of Yanbu. In May, the CEO of the state-backed energy company Aramco stated that approximately 2 million barrels are supplied to refineries on the west coast, while the remaining 5 million barrels are exported.
According to the sources, Saudi Arabia is engaged in preliminary discussions with several neighboring countries regarding increasing the pipeline’s capacity by an additional 1 to 2 million barrels per day. However, it remains unclear whether this will involve upgrading existing infrastructure or constructing a new pipeline. One source indicated that the plan might also include the construction of a smaller, secondary pipeline for transporting refined petroleum products.
Kuwait, Bahrain, and Qatar lack alternative routes that would allow them to export oil while bypassing the Strait of Hormuz. Meanwhile, Iraq’s pipeline to Turkey has not been operating at full capacity due to long-standing disputes and frequent shutdowns. Last month, at the Atlantic Council Global Energy Forum, Sheikh Nawaf Al-Sabah, CEO of Kuwait Petroleum Corporation, stated that they are discussing with Saudi Arabia and Gulf partners how to expand pipeline systems to enhance Kuwait’s oil transport capabilities. Two sources indicated that the expansion capacity could range from 1 million to 2 million barrels per day and might also include refined fuels. However, another source noted that implementing this project would take several years, cost billions of dollars, and require changes to the current pricing mechanism for Saudi crude oil.
Due to Iran’s blockade of the Strait of Hormuz, Gulf nations were forced to cut oil production by approximately 12 million barrels per day, causing a spike in international oil prices. Although shipping partially resumed following a preliminary agreement between the US and Iran last month, operations have yet to return to pre-conflict levels. In May, Iraq’s oil production plummeted from 4.3 million barrels per day to below 1.5 million. In March, Kuwait declared force majeure, and Bahrain’s Sitra refinery was hit by several Iranian missile strikes. Zaid Belbagi, managing partner at the London-based Hardcastle Advisory, stated that discussions regarding a new pipeline corridor involving Saudi Arabia, Kuwait, and Qatar highlight a significant strategic reality: recent conflicts have demonstrated the risks of relying solely on the Strait of Hormuz.
Reuters reported that the United Arab Emirates (UAE) is currently the only Gulf nation with the capacity to transport significant volumes of oil while bypassing the Strait of Hormuz. The country has completed half of the work on a new west-east pipeline; once operational next year, it will double the capacity for transporting crude oil to Fujairah. Currently, the existing pipeline from Abu Dhabi to Fujairah can transport up to 1.8 million barrels of oil daily. An energy sector source suggested that Saudi Arabia’s expansion plans indicate that post-conflict competition between Saudi Arabia and the UAE could evolve into a race to increase oil production, potentially exerting downward pressure on international oil prices.
