Oil markets are scrambling for alternatives as the closure of the Strait of Hormuz continues to choke one of the world’s most critical energy corridors, with Saudi Arabia’s East-West Petroline rapidly stepping into focus as a partial workaround.
The escalation around Hormuz — now well known as the source of a fifth of global oil supply — has already triggered a sharp spike in crude prices amid the US and Israel’s ongoing conflict with Iran, with Brent peaking near US$106 a barrel and WTI above US$102. Even with the pullback, prices remain elevated (around US$102 for Brent and $95 for WTI on Tuesday) amid continued uncertainty over Hormuz supply flows, forcing producers, traders and refiners to rethink logistics in real time.
With tanker traffic severely curtailed and security risks elevated, attention has shifted to infrastructure that can bypass the chokepoint altogether.
Petroline ramps up as Red Sea exports rise
Saudi Arabia’s East-West pipeline, often referred to as the Petroline, runs from oil fields in the country’s Eastern Province to export terminals on the Red Sea coast. In recent days, state oil giant Saudi Aramco (Unlisted:ARAM) has reportedly ramped up utilisation of the system, redirecting crude flows westward to keep exports moving despite the disruption in the Gulf.
That shift is already showing up in shipping data, with tanker loadings increasing at Red Sea ports as buyers accept deliveries that avoid the Hormuz route entirely. For importers in Europe and parts of Africa, this alternative route offers a relatively direct substitute, helping to ease some immediate supply pressure.
The pipeline’s design has long been viewed as a strategic hedge against precisely this kind of geopolitical shock. With a capacity widely estimated at around 5 million barrels per day, it provides Saudi Arabia with one of the few large-scale overland export options in the region.
A stopgap, not a solution
But while the Petroline is proving its value, it is far from a complete fix.
Even at full capacity, the pipeline can only handle a fraction of the oil that normally transits the Strait of Hormuz each day — leaving a substantial gap in global supply chains. Saudi Arabia may be able to reroute much of its own production, but other major Gulf exporters, including Iraq, Kuwait and Qatar, remain heavily dependent on the strait with limited alternatives.
There are also operational and logistical constraints. The Petroline feeds into Red Sea terminals that have their own throughput limits, and a surge in volumes is placing additional strain on port infrastructure, storage and tanker availability. Shipping routes from the Red Sea to key Asian markets are also longer and more expensive, adding to freight costs at a time when insurance premiums are already rising sharply due to regional security risks.
The Red Sea route is also far from risk-free. Tanker owners and operators remain wary of potential Houthi attacks around the Bab el-Mandeb Strait chokepoint, where the threat of disruption continues to shadow vessels using the corridor
Critically, analysts note that the pipeline was never designed to fully replace Hormuz flows for an extended period. It was built as a contingency buffer — a way to maintain some level of exports during temporary disruptions — rather than a long-term substitute for one of the world’s busiest maritime chokepoints.
Broader implications for oil markets
The reliance on the Petroline underscores how few viable alternatives exist when Hormuz is compromised. While the UAE operates a smaller pipeline from Abu Dhabi to the port of Fujairah outside the Gulf, and there are limited options elsewhere, the region’s export infrastructure remains overwhelmingly tied to the strait.
That structural bottleneck is amplifying market volatility. Traders are now factoring in not just immediate supply losses, but also the risk of prolonged disruption and the limitations of existing bypass capacity.
The result has been a rapid repricing of oil, with benchmarks pushing higher as supply uncertainty builds. At the same time, the shift in flows is reshaping trade patterns, with more cargoes heading west and increased competition for available tankers in alternative routes.
Strategic pressure point laid bare
For Saudi Arabia, the Petroline is demonstrating its strategic importance, allowing the kingdom to maintain a degree of export continuity and assert some control over supply during the crisis.
But the broader lesson for energy markets is less reassuring.
The current situation highlights how concentrated global oil logistics remain — and how vulnerable they are to disruption in a single narrow waterway. Even with contingency infrastructure like the Petroline operating at or near full capacity, the system cannot fully compensate for a sustained shutdown of Hormuz.
As tensions persist, the pipeline may buy time. It cannot, however, resolve the underlying supply shock — leaving markets exposed to further volatility in the days and weeks ahead.