Bessent Says Strait of Hormuz Obsolete Within Two Years

Treasury Secretary Scott Bessent declared that Gulf oil producers could circumvent the Strait of Hormuz within two years, accelerating the timeline for a pipeline expansion that has intensified since Iran's war disrupted a key oil route. During a G20 financial meeting in Asheville, North Carolina, Bessent remarked that the Strait of Hormuz would become "like a worthless piece of water" within that timeframe.

Saudi Arabia had already transported approximately 7 million barrels per day through its East-West pipeline to the Red Sea, using Yanbu as an alternative export point. The UAE's ADNOC plans to construct its West-East 1 Pipeline, doubling oil export capacity through Fujairah, currently at 1.8 million barrels per day, to 3.6 million bpd.

The project is scheduled to be operational by 2027. Iraq is contemplating several alternatives, including a proposed pipeline through Syria to the Mediterranean, which could cost $15 billion and take four years to construct. Iraqi officials are also examining repairs to an older Syria pipeline and heightened shipments via the Kirkuk-Ceyhan system into Turkey.

Kuwait is contemplating linking its oil infrastructure with Saudi Arabia and the UAE, granting its crude access to Fujairah or Red Sea ports. Japan, reliant on Middle Eastern crude, has committed to financially supporting Gulf pipeline initiatives. This two-year forecast necessitates swift progress on several pipeline projects. The ongoing investments indicate that Gulf producers no longer perceive the bypass capacity as a contingency plan, integrating it into the export system.