When the Strait of Hormuz closed, Saudi Arabia had a pipe in the desert. The East-West pipeline, known as Petroline, runs more than 1,200 kilometers from Gulf oil fields to the Red Sea port of Yanbu, and Riyadh switched it on as its main way out.
Roughly 20% of the world’s oil supply normally flows through the strait. Once it shut, prices surged and traders quickly added a heavy geopolitical risk premium. Ukrinform described the closure as the start of a chain reaction that is already changing how oil gets moved.
Think of it like a highway shutting down and everyone heading for the one back road. It works, but only up to a point.
A contingency route becomes the main one
Petroline began as a backup. Now, with flows redirected to Yanbu, it is effectively the kingdom’s primary export artery. Last month Saudi Aramco President and CEO Amin H. Nasser told analysts the route is “critical” to keeping exports stable. People in the industry have taken to calling it a “brilliant engineering solution.”
The limits are plain, though. The pipeline cannot fully replace shipping by sea. Desert operations mean extreme heat and sandstorms, which add technical risk, and moving oil overland costs more.
Tanker insurance premiums in high-risk zones have also jumped sharply, adding to transport costs and feeding through to what end users pay. Losses from a blockade of this size cannot be made up quickly, Ukrinform wrote.
The price of a bypass
According to the Financial Times, Gulf states are looking at expanding existing systems and at brand-new corridors, possibly reaching toward the Mediterranean. Industry estimates put the cost of copying a Saudi-style pipeline at no less than $5 billion. More ambitious cross-border routes could take $15-20 billion.
Money is only part of it. Such projects run into unstable transit states, long fights over who controls what, and nervous investors. For now the likelier path is to enlarge what already exists, namely the East-West pipeline and the Abu Dhabi-Fujairah route.
Europe and Asia, meanwhile, are looking for other suppliers, a shift Ukrinform said could slowly redraw the balance of power in energy markets.
