The Race to Build a World Beyond Hormuz

The United States and its allies are investing in infrastructure to navigate the ongoing conflict around the Strait of Hormuz, but with little hope of resolving the war soon. The Senate is unlikely to pass a resolution to limit President Trump's war powers, and if it does, Trump would likely veto it. The Iran-GCC-Iraq meeting scheduled for September 11 in Oman has been postponed indefinitely.

Treasury Secretary Scott Bessent warns that the Strait of Hormuz will become "a worthless piece of water" in two years, effectively rendering it irrelevant. The U.S. already imports half a million barrels a day from the Persian Gulf, a fraction of the pre-war level, due to domestic production and Canadian imports. Saudi Arabia, the UAE, Iraq, and Turkey have jointly built pipeline capacity around the strait, but this is only a partial replacement, as the Red Sea route is now vulnerable to Houthi attacks.

The Houthis have attacked Saudi oil facilities, though Saudi Arabia denies these claims. The Gulf producers, Qatar and Kuwait, have shifted their exports to shuttle tankers and ship-to-ship transfers in the Gulf of Oman, which is inside the war zone. This workaround has caused significant economic strain, with gasoline prices rising to $4.44 a gallon, 49% above pre-war levels.

The conflict has cost $38 billion in its first four months and created a munitions shortfall, according to the Pentagon. The war's impact on the economy is evident, with consumer prices rising 3.4% year-over-year in August. Public sentiment is divided, with 80% expecting the war to continue indefinitely, and 33% of independents backing a Democrat in the upcoming House race.