Saudi Arabia weighs Red Sea pipeline expansion after tanker attack

Saudi Arabia is considering expanding the capacity of an overland pipeline that carries crude from its eastern oil fields directly to the Red Sea coast, bypassing the Strait of Hormuz. The upgrade would raise the current maximum from 7 million barrels per day to 9 million barrels per day, after a supertanker carrying Saudi crude was among two vessels attacked in the strait Tuesday in an assault attributed to Iran.

Reuters reported Tuesday, citing sources familiar with the matter, that Saudi Arabia is reviewing plans to expand the bypass route so more crude can reach the western Red Sea coast without transiting the Strait of Hormuz.

The existing pipeline, which carries crude from Saudi Arabia's eastern fields to the Red Sea coast, can currently move up to around 7 million barrels per day. If the expansion proceeds as planned, total capacity would rise to a maximum of 9 million barrels per day.

Saudi Arabia has been holding preliminary consultations with some neighboring countries, including Kuwait and Qatar, on the plan, according to sources. Expanding the route's capacity would allow not only Saudi Arabia but also other Gulf states to ship more crude without passing through the Strait of Hormuz.

The move reflects a judgment that the Strait of Hormuz remains unreliable. Iran attacked two tankers attempting to transit the strait Tuesday, while funeral ceremonies for former Supreme Leader Ayatollah Seyyed Ali Khamenei were underway. One of the vessels was a supertanker carrying Saudi crude.

Qatar and Saudi Arabia, both affected by the attacks, lodged immediate protests with Iran. The United States subsequently revoked its sanctions waiver on Iranian oil in full, and the US military struck more than 80 targets on Iran's Qeshm Island and in the Sirik area in southern Iran in response. Iran has since threatened retaliation, leaving the security of the Strait of Hormuz far from assured.

"The discussions around a new pipeline network involving Saudi Arabia, Kuwait and Qatar reflect the current strategic reality," a representative of British political advisory firm Hardcastle Advisory said. "This war has served as a stark reminder to regional states of how dangerous it is to rely solely on the Strait of Hormuz."

Iran has wielded the Strait of Hormuz as its most powerful lever in the war, using it to pressure neighboring countries and the global economy. Paradoxically, however, the crisis is expected to accelerate efforts by regional states to reduce their dependence on the strait.

However, expanding pipeline capacity would require billions of dollars in investment over several years, meaning the move is unlikely to meaningfully reduce reliance on the Strait of Hormuz in the near term.

Meanwhile, other Gulf states are also moving to address Hormuz risk. The United Arab Emirates has begun construction to double the capacity of its bypass pipeline, which carries crude to the port of Fujairah without passing through the strait. The project is reported to be roughly half complete.