By Shashi P.B.B. Malla

New Routes bypassing Hormuz?

Just six months ago, exporting oil and natural gas from the Persian Gulf was pretty straightforward: produce at the cheapest price possible, export it through the fastest route then available – the Strait of Hormuz – and sell it to the countries that can pay the most (Lisa Friedman/ The New York Times, Aug. 15-16).

Unfortunately, those days are over, thanks to Trump’s unnecessary war of choice and Iran’s subsequent reaction.

Transport through the Strait of Hormuz, long the most efficient path for exports, now remains greatly curtailed because of the continued conflict in the region.

“Much of the oil getting through the strait is

on tankers navigating a treacherous gauntlet of Iranian attack drones, or running dark with their location devices turned off” (NYT).

Other Gulf countries that have for decades produced much of the world’s oil are now seeking new ways and means on breaking their dependence on the narrow waterway between Iran and Oman – the two other Gulf countries guarding the exit/entry to/from the Arabian Sea.

They are building or expanding pipelines and other infrastructure that can bypass it, and vastly expanding storage capacity in other places like Asia.

These endeavours show how the conflict is changing the oil business in the Persian Gulf.

This will cost billions of dollars and take years to complete, but companies and governments consider them essential hedges in an increasingly volatile region.

Even if a relative peace between the United States and Iran materializes, Gulf exporters recognize that relying too heavily or exclusively on a single transit route is a risk they can no longer afford to take.

And these moves, over time, could diminish Iran’s clout in the region.

What the ‘other’ Gulf countries have not factored into the equation is Iran’s future behaviour.

Will it just accept that the other countries bypass the Strait?

Can it not destroy these other new transit infrastructures?

Which country or international organization can or will deter Iran?

Given the evil nature of the current leadership in Iran, that regime has all the cards, the other Gulf nations none!

Before the United States and Israel began conducting military strikes on Iran on February 28, about 20 million barrels of crude oil a day sailed through the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman/Arabian Sea.

But overlapping U.S. and Iranian blockades, sea mines, missile strikes and skyrocketing insurance costs have effectively shut down the Strait.

Crude exports through the Strait had fallen to about 3.7 million barrels a day as of the first

To be sure, more oil than that is being exported from the Gulf, partly via vessels that take steps to make them hard to track.

Millions of barrels a day are also exiting through existing routes like pipelines not dependent on access to the Strait of Hormuz – like the UAE pipeline connecting the Persian Gulf to the Gulf of Oman and the Saudi pipeline connecting its oil fields in the east to its Red Sea ports.

If not directly, Iran has already taken the help of its Houthi proxies to curtail this initiative.

Still, the frenzy of activity for lasting workarounds to the Strait is evident throughout the region.

Thus, in Fujairah, a UAE port city facing the Gulf of Oman in the Arabian Sea, constructing crews are working around the clock to lay a secondary crude oil pipeline parallel to an existing one that delivers oil from onshore fields in Abu Dhabi on the other side of the peninsula.

This ambitious project aims to double the country’s bypass capacity to 3.6 million barrels a day, allowing nearly all of Abu Dhabi’s onshore crude to reach international tankers without ships having to use the Strait of Hormuz.

In addition, the Emirates state owned energy giant, Abu Dhabi National Oil Company, or ADNOC, said that it planned to spend US $ Dollar 8.2 billion to expand its natural gas business.

The company is also considering plans for liquefied gas export facility on UAE’s eastern coast in the Arabian Sea as a way to bypass the Strait of Hormuz.

In neighbouring Saudi Arabia, the state oil giant, Aramco, is accelerating a multibillion-dollar expansion of its East-West Pipeline.

Designed during the Iran-Iraq war in 1980s, the 1,201 kilometre pipeline crosses the Arabian Peninsula to the Red Sea port of Yanbu.

Aramco’s chairman, Yasir O. Al-Rumayyan, this year called it the kingdom’s “economic lifeline”, successfully re-routing some seven million barrels per day since Iran effectively closed the Strait of Hormuz after U.S. and Israeli military strikes.

The uncertainty in the Strait of Hormuz is also prompting other ventures among Gulf producers (NYT).

Kuwait is in discussions with Saudi Arabia and other Arab nations to build a pipeline that would connect the country’s oil fields to ports on the Red Sea or Oman.

Iraq and Jordan have revived long-delayed plans for a pipeline that could carry up to one million barrels per day to the port of Aqaba off the Red Sea.

And Iraq is speeding up plans to rebuild a damaged oil pipeline to ship crude oil from Iraqi fields in Kirkuk to Syria’s Mediterranean coast.

Here again the security risk from Iraq’s Shia militias has also to be considered – is their primary loyalty to their own state or to clerical regime in Iran?

All this frenzy leaves Bahrain and Qatar out in the cold.

Qatar hopes that its mediation efforts will placate Iran, but history has shown again and again that appeasement vis-à-vis aggressors is always a bad bet.

In addition to new pipelines, Gulf nations are building physical insurance policies by expanding storage in places like South Korea, Japan and India.

Iran’s attempt at Hegemony in the Persian Gulf

Iran’s position in the Strait of Hormuz is detached from reality.

Time and again, it stresses only its own rights and interests as a maritime state, its own sovereignty in the entire Gulf, and ignores the legitimate rights of other littoral states.

The other Gulf states must consider their long-term national interests and cut down Iran to size.

The recent security/defence pact under the aegis of Saudi Arabia and including Pakistan, a nuclear power, and Turkey, a NATO member is a step in the right direction.

But it is not enough. The other Gulf states must work through the UN Security Council and General Assembly to put together an expeditionary force to deter Iran from permanently weaponizing the Strait of Hormuz.

The writer can be reached at: shashimalla125@gmail.com