The race is on for Iraq and the United Arab Emirates to secure alternative oil pipeline routes as the Strait of Hormuz remains closed due to the ongoing war. With Iraq's economy heavily reliant on oil exports, the recent approval of plans to accelerate crude exports through the Kurdistan-Turkey pipeline network is a significant development. This move aims to triple existing shipments from 220,000 barrels per day to 770,000, providing a much-needed alternative passage through Kurdistan to Turkey's Mediterranean port of Ceyhan.
However, the situation is more complex for Iraq due to its geographical dependence on the Strait of Hormuz. Most of Iraq's oil exports transit through this chokepoint, and the recent data reveals a stark dependency on the Persian Gulf. The Iraqi cabinet's approval of the Kurdistan-Turkey pipeline network is a strategic move to mitigate the risks associated with the Hormuz closure. By increasing its export capacity, Iraq can ensure a more stable and reliable oil supply, which is crucial for its economy, contributing 53% to its real GDP in 2025.
Meanwhile, the UAE is also fast-tracking the construction of the West-East pipeline to Fujairah, aiming to double the export capacity of the Abu Dhabi National Oil Company (ADNOC). This project, expected to be completed in 2027, will enable the UAE to bypass the Strait of Hormuz and meet rising global energy demand. The UAE's ability to still export oil through other terminals, such as Fujairah, provides a certain level of flexibility in the face of the Hormuz closure.
However, the existing alternatives are not without their challenges. The Saudi East-West pipeline has been attacked by Iran, and the Fujairah terminal has also faced disruptions from Iranian drones. These attacks highlight the vulnerability of alternative routes and the ongoing risks associated with the war. The combined capacity of the East-West pipeline and the UAE pipeline to Fujairah is estimated at 3.5 to 5.5 million barrels per day, but this still falls short of the prewar levels of approximately 20 million barrels per day.
Developing alternative export routes is a complex and time-consuming process, requiring massive investments in infrastructure and transnational agreements. The ongoing war and the risks associated with Iranian attacks further complicate matters. The Strait of Hormuz remains a critical chokepoint, and vessels transiting through the Persian Gulf are at risk of attack by Iranian forces and U.S. sanctions. As the situation unfolds, the race to secure alternative oil pipeline routes continues, with both Iraq and the UAE striving to ensure a stable and reliable supply of oil in the face of uncertainty.
