The Oil Market’s Backup Plan Is Breaking Down
Traffic through the Strait of Hormuz — which carried about one-fifth of global petroleum liquids before the Iran conflict — has been severely disrupted, forcing Gulf producers to rely on alternative routes such as Saudi Arabia’s East-West Pipeline to the Red Sea port of Yanbu. Drone strikes have forced shutdowns of that pipeline, and Houthi advances toward Perim Island in the Bab el-Mandeb Strait are increasing security risks at the secondary chokepoint that now handles diverted flows.
Why It Matters
With roughly 20% of global petroleum liquids typically transiting Hormuz, the loss of that corridor already prompted significant rerouting; attacks on the East-West Pipeline and escalating threats at Bab el-Mandeb further erode the limited backup capacity and could constrain Saudi exports within weeks. The situation illustrates how concentrating alternate flows through a small number of routes increases systemic vulnerability during regional conflicts.
Key Facts
- Hormuz share (H1 2025): 20.9 million barrels per day (~20% of global petroleum liquids)
- East-West Pipeline flow before shutdown: roughly 4 million barrels per day to Yanbu (≈4% of global supply)
- Yanbu inventories estimated duration: about 5 to 7 days at recent export rates
- Estimated full repair time (one industry source): five to six weeks; partial operations may resume sooner
- Saudi production (February vs August): 10.9 million bpd in February; 6.2 million bpd in August (per Saudi report to OPEC)
Before the Iran conflict that began in late February, the Strait of Hormuz was the single largest oil chokepoint in the world, carrying roughly one-fifth of global petroleum liquids. As flows through Hormuz have collapsed, Gulf producers have shifted more crude onto limited bypass options. Saudi Arabia’s primary alternative is the East-West Pipeline, which moves oil from the kingdom’s eastern fields across the peninsula to the Red Sea port of Yanbu.
That contingency route was substantially used during the disruption but has itself been struck by drone attacks, prompting a shutdown after it had been delivering about 4 million barrels per day to Yanbu. Available inventories at Yanbu can sustain recent export levels for only about five to seven days if the pipeline remains offline, and repair timelines are uncertain — one industry source suggested a full restoration could take five to six weeks, though partial service might return sooner.
The vulnerability extends beyond the pipeline and its storage. Tankers leaving Yanbu for Asian markets generally transit the Bab el-Mandeb Strait at the southern entrance to the Red Sea. Iran-aligned Houthi forces have advanced along Yemen’s Red Sea coast and reached Perim Island, enhancing their ability to threaten traffic through that strait. EIA data cited in the source show flows through Hormuz fell from 21.6 million bpd in Q4 2025 to 4.9 million bpd in Q2 2026, while flows through Bab el-Mandeb rose from 5.4 million to 8.1 million bpd over the same period, reflecting substantial rerouting.
The combination of a disabled bypass artery, limited port inventories, and escalating security risks at an alternate chokepoint means Saudi Arabia and other Gulf producers face mounting logistical constraints even though large reserves remain underground. Disruptions need not close a strait entirely to have significant effects: higher insurance costs, ship diversions and longer routings around Africa can all reduce effective tanker capacity and raise the economic cost of maintaining exports while repairs and security responses proceed.
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