The situation
As of 24 July, tanker flows through the Strait of Hormuz have slowed to a trickle amid the current conflict. Saudi Arabia is moving crude to Yanbu on the Red Sea through its East-West pipeline system, while the UAE is using the Abu Dhabi Crude Oil Pipeline from Habshan to Fujairah, outside the strait; both routes are reported to be operating near full capacity.
ADNOC is accelerating construction of a parallel 300-kilometre pipeline to Fujairah, intended to add more than 1.2 million barrels per day of supply to the Gulf of Oman export hub. The project is not yet operational: completion depends on pipeline construction and Fujairah port expansion, with early 2027 targeted but mid-2027 assessed as more likely.
Why it matters
The available bypasses reduce some exposure to Hormuz but cannot substitute for it. The International Energy Agency estimates that Saudi and UAE alternatives had 3.5-5.5 million barrels per day of available capacity before the conflict, against nearly 20 million barrels per day of crude, condensates and petroleum products that moved through Hormuz in 2025.
The shortfall leaves Gulf exports and Asian importers exposed to prolonged shipping disruption, particularly China and India, which received 44% of Hormuz crude flows in 2025. Yanbu exports also remain exposed to maritime-security risks beyond the Red Sea outlet, while the pipelines themselves are potential targets.
What changed
Saudi Arabia’s East-West pipeline and the UAE’s existing Fujairah route are now reported near full capacity, while ADNOC has accelerated—but not completed—its additional Fujairah pipeline.
The assessment
Current judgement
Existing Saudi and UAE bypass infrastructure provides only partial mitigation while Hormuz traffic remains severely disrupted.
Key assumption
The assessment depends on the reported near-full use of the existing Saudi and UAE routes being sustained rather than a short-lived operating posture.
Impacts
Energy
Saudi and UAE bypass pipelines are reducing some export exposure, but their combined capacity remains far below the nearly 20 million barrels per day that normally moved through Hormuz in 2025.
Acute implicationProlonged disruption keeps Gulf oil supply flows dependent on a limited set of heavily used alternative routes.
Trade & Supply Chains
Near-stop tanker traffic through Hormuz constrains a principal oil-export corridor for Gulf producers, while the available pipeline alternatives cannot carry normal seaborne volumes.
Acute implicationAsian buyers, especially China and India, remain highly exposed because they received 44% of Hormuz crude flows in 2025.
Military & Security
The continuing disruption makes export pipelines and the maritime routes serving Yanbu and Fujairah operationally more important and therefore more exposed to regional security risks.
Markets
The physical shortfall between Hormuz throughput and available bypass capacity is a continuing transmission channel for oil-market risk, particularly for refiners and traders reliant on Gulf crude.
Full edition assessment · Energy
Global energy conditions are volatile under elevated current pressure because commercial tanker movements through Hormuz have slowed sharply while Saudi and UAE bypass pipelines are reportedly operating near capacity. The continuing US-Iran conflict and reported threats to Saudi-linked shipping through Bab el-Mandeb add risk to crude export logistics, tanker availability and marine insurance across both Gulf and Red Sea routes.
The pressure is concentrated in physical Gulf export flows rather than a confirmed universal supply outage. Saudi and UAE pipelines mitigate part of the disruption, but their available capacity remains materially below normal Hormuz volumes; crude-exporting producers with bypass access are relatively better positioned than Gulf-dependent refiners, Asian crude buyers, airlines and fuel-intensive logistics operators.
Moderate confidence · Volatile · Volatile
Gulf export bottleneck raises physical crude and freight exposure
Hormuz disruption has pushed Saudi and UAE bypass routes toward full use, yet those routes cannot replace normal seaborne volumes through the strait. This concentrates export resilience in Yanbu and Fujairah while increasing dependence on a limited set of pipelines, ports, tankers and insured maritime passages.
Asian refiners reliant on Gulf crude, particularly in China and India, face the clearest exposure to delayed cargoes, replacement-cost risk and changing crude slates; airlines and fuel-intensive logistics firms remain exposed if higher freight and insurance costs pass into delivered fuel prices.
Signal to watchVerified commercial tanker transits through the Strait of Hormuz either recover sustainably or remain near current suppressed levels.
Red Sea spillover narrows the value of western export diversification
Saudi crude routed to Yanbu avoids Hormuz, but reported Houthi action against Saudi-linked tankers and claimed restrictions around Bab el-Mandeb expose the Red Sea outlet to a separate maritime-security risk. The result is a reduced diversification benefit if threats materially deter or delay Red Sea liftings.
Saudi export logistics, tanker operators, marine insurers and cargo owners using Red Sea routes are the most directly exposed; integrated majors may have more flexibility than stand-alone refiners dependent on prompt Middle East deliveries.
Signal to watchMaritime advisories and verified vessel movements show whether Saudi-linked commercial traffic through Bab el-Mandeb is being materially reduced or rerouted.
Full edition assessment · Trade & Supply Chains
Trade and supply-chain conditions are worsening as maritime risk affects two strategic passages: Hormuz for Gulf energy exports and Bab el-Mandeb for Red Sea transit. The direct operational consequence is greater uncertainty over routings, timing, freight, insurance and delivery reliability, without sufficient evidence that either chokepoint is comprehensively closed to all commercial traffic.
The pressure is most acute for oil and refined-product cargoes, shipping services and importers dependent on prompt Gulf supply. A separate, targeted disruption is forming in North America: specified Canadian vehicle, alcohol and dairy-related imports face a scheduled additional US duty from 19 August, subject to customs implementation details.
Moderate confidence · Worsening · Rising
Maritime insecurity converts into route, insurance and scheduling disruption
The extended strike campaign around Iran, Bahrain's shelter warning and reported attacks affecting Saudi-linked tanker traffic compound an already severe Hormuz constraint. Vessel operators and cargo owners must price exposure across connected Gulf and Red Sea legs rather than treating one alternative route as fully insulated.
Tanker operators, charterers, marine insurers and buyers requiring time-sensitive Gulf cargoes are most exposed to delayed liftings, higher voyage costs and operational rerouting.
Signal to watchVerified transit data and maritime-security notices clarify whether disruption spreads from individual incidents into sustained reductions in commercial movements through either chokepoint.
Sanctions and tariffs add targeted compliance friction
The European Union's expanded controls on Russian-linked banks, crypto services, vessels, maritime support and dual-use entities widen screening and due-diligence requirements across affected cross-border supply chains. In parallel, the United States' scheduled Canada tariffs require importers to determine product coverage and exclusions before collection begins.
Trade-finance providers, maritime service firms, dual-use suppliers and US importers of covered Canadian goods face the most immediate documentation, classification and counterparty-screening burden.
Signal to watchUS Customs and Border Protection publishes product-level implementation instructions, while EU or national authorities identify additional entities or service providers for enforcement.
Full edition assessment · Military & Security
Military and security conditions are worsening because the US strike campaign in Iran has continued for 13 consecutive nights with an explicit maritime-security objective, while reported threats now extend to Bahrain and Saudi-linked Red Sea shipping. The immediate pattern is regional spillover around critical maritime infrastructure and commercial navigation rather than evidence of a broader, fully generalised regional war.
Security exposure is concentrated around Hormuz, Bahrain, the Red Sea approaches and the alternative oil-export infrastructure that has become more operationally important during disrupted tanker flows. Attribution for the incoming fire detected by Bahrain and the practical scope of the Houthi shipping restrictions remain incomplete.
Moderate confidence · Worsening · Rising
Maritime-security campaign increases spillover risk to Gulf partners
Continuing strikes intended to reduce threats to commercial shipping are occurring alongside a Bahraini shelter warning after detected incoming fire. This creates a direct risk that force-protection requirements and defensive activity expand beyond the immediate strike theatre.
Bahrain-based facilities, commercial ports, civilian airspace management and regional shipping operations are most exposed to further alerts or defensive disruptions while attribution remains unresolved.
Signal to watchBahraini authorities identify the source, trajectory or effects of the incoming fire detected on 24 July 2026.
Bypass infrastructure becomes a higher-value security dependency
Near-capacity use of Saudi and UAE oil-export pipelines makes the Yanbu and Fujairah systems more consequential to regional supply continuity. Their importance rises precisely as maritime alternatives face risks in both Hormuz and the Red Sea.
Pipeline corridors, export terminals and associated loading operations at Yanbu and Fujairah become more exposed to disruption because spare export-routing capacity is limited.
Signal to watchAuthorities or operators report a security incident, operational restriction or protective measure affecting the Yanbu or Fujairah export systems.
Full edition assessment · Economic Pressure
Economic pressure is elevated but uneven. The European Union's new package broadens restrictions on Russian financial institutions, crypto services, oil-export support, shipping networks and dual-use procurement, raising compliance and circumvention costs for Russian and third-country counterparties. The United States' Canada measures add a separate, sector-specific source of bilateral trade pressure ahead of their scheduled 19 August start.
These are targeted policy actions rather than evidence of a uniform global tightening. The EU has simultaneously paused automatic adjustment of its oil-price-cap mechanism in response to exceptional market conditions linked to Hormuz, moderating an immediate additional constraint on Russian oil pricing while maintaining the wider package.
Moderate confidence · Worsening · Rising
Russian trade and payment channels face higher transaction friction
The EU has widened transaction restrictions, listings and anti-circumvention tools across Russian and associated third-country financial, crypto, shipping and dual-use networks. The mechanism is to make payment execution, oil-support services and procurement of controlled goods more costly and more vulnerable to enforcement disruption.
Russian-linked trade finance, crypto-service providers, shadow-fleet support networks and third-country intermediaries handling controlled technologies have the clearest direct exposure.
Signal to watchEU institutions or national authorities designate further third-country financial, crypto or maritime-service entities under the new authorities.
North American tariff exposure remains implementation-dependent
The United States has announced additional duties across specified Canadian vehicles, alcoholic beverages and dairy-related products, with collection scheduled for 19 August. Until tariff-line guidance and exclusions are operationalised, commercial exposure is concentrated in customs treatment, contract repricing and inventory decisions rather than confirmed economy-wide disruption.
Covered Canadian exporters and US importers are most exposed to margin pressure, entry delays and possible pre-effective-date shipment adjustments.
Signal to watchCanada announces a formal response or the United States amends, suspends or operationalises the measures through customs guidance before 19 August 2026.
What to watch
Will Gulf producers materially reduce their dependence on the Strait of Hormuz before 2027?
Horizon: Through mid-2027
- Most Likely
Hormuz transit recovers before new capacity arrives
Restored commercial passage reduces the immediate need for additional bypass capacity, while Saudi and UAE routes remain contingency infrastructure.
Indicator: Sustained recovery in verified tanker movements through the strait.
- Plausible
Disruption persists and the Fujairah expansion adds resilience
The UAE gains additional export flexibility once the parallel pipeline and supporting port capacity are operational, but regional bypass capacity remains below normal Hormuz throughput.
Indicator: Commissioning of the new Fujairah line alongside expanded loading capacity.
- Least Likely
Disruption persists without timely usable expansion
Saudi and UAE routes remain constrained near capacity, prolonging the physical export shortfall relative to normal Hormuz flows.
Indicator: Construction or port-expansion delays beyond mid-2027.
Evidence basis
IEA capacity estimates and reported current operation of Saudi and UAE bypass routes, alongside ADNOC’s stated expansion plan.
What would change the outlook
A durable reopening of Hormuz to normal commercial tanker traffic.
- Do verified tanker transits through the Strait of Hormuz recover materially from current near-stop levels?
- Does ADNOC complete the parallel Fujairah pipeline and the required port expansion on a timetable that adds usable export capacity in 2027?
Evidence and uncertainty
Moderate confidence. Moderate confidence. 2 retained references from 2 reporting origins (AP News, AFP). Claim-level independent corroboration has not been established. Confidence concerns the evidence for the reported development, not the probability of an outlook.
Useful context
ADNOC
Abu Dhabi National Oil Company, the UAE state energy company.
It is accelerating the additional crude pipeline to Fujairah.
Abu Dhabi Crude Oil Pipeline (ADCOP)
A crude-oil pipeline linking Habshan in Abu Dhabi to Fujairah on the Gulf of Oman.
It provides the UAE’s existing route for exporting crude outside the Strait of Hormuz.
Fujairah
A UAE emirate and oil-export hub on the Gulf of Oman, outside the Strait of Hormuz.
It is the outlet for existing and planned UAE bypass pipeline capacity.
Geographic context
- 01Strait of Hormuz (region)
- 02Fujairah, UAE (city)
- 03Yanbu, Saudi Arabia (city)