Gulf states scramble for Strait of Hormuz alternatives

Recent months of blockades and uncertainty surrounding the Strait of Hormuz have prompted energy exporters to seek alternative shipping routes. Iranian officials demanded the U.S. comply with a June framework agreement and offer compensation for alleged violations before resuming negotiations. However, U.S. President Donald Trump claimed the U.S. Navy already controls the strait, stating that it had been "mine swept" by the military.

The narrow waterway between Iran and Oman is a critical oil shipping route, carrying about 20% of global crude exports from the Persian Gulf to Europe, Asia, and North America. Saudi Arabia has demonstrated the ability to redirect significant volumes away from the Strait of Hormuz, while the UAE has had less success. Saudi Arabia has redirected its crude through the East-West Pipeline from its eastern oil fields to the Saudi Red Sea port of Yanbu, keeping shipments to global markets by circumventing Hormuz.

During April and May, Saudi cargo shipments fell from 47.5 million tons to 6.3 million tons, while exports through the Red Sea rose from 29.6 million to 54.8 million tons, replacing around 61% of the volume lost on the Persian Gulf side. The UAE is exploring additional capacity alongside its Abu Dhabi Crude Oil Pipeline (ADCOP), but its ports remain close to Iran and may be vulnerable to drones and missiles.

Alternative routes, such as new pipelines and longer sea routes, have been proposed, but they would be expensive and take years to build. These projects cannot solve the oil market's immediate problem, and rerouting ships around the Cape of Good Hope can add significant costs to every voyage. The Red Sea route also has its own security weaknesses, as ships moving toward the Suez Canal must pass through Bab al-Mandab, where Houthi attacks have repeatedly threatened commercial shipping.