Live Markets-The Hormuz straitjacket: what other options exist?
XLE•Saudi Arabia may expand pipeline capacity
UniCredit notes, as per Reuters' reporting, that Saudi Arabia is considering expanding the capacity of the East-West line by up to 2mbpd, part of a trend towards big investment by Middle Eastern countries in developing alternative routes.
Although "pipelines are no panacea," say UniCredit's strategists, as land-based energy infrastructure has come under attack too, they say the closure of the Strait could be a turning point, "accelerating the largest wave of Middle Eastern oil export investment in decades".
(Harry Robertson)
Oil exports face limited alternatives to the Strait of Hormuz
Oil prices have jumped in recent weeks as Iran has attacked ships in the Strait of Hormuz and the conflict has flared once again.
A key alternative route for Saudi Arabian oil, the Bab el-Mandeb strait in the Red Sea, has also come under threat from the Iran-aligned Houthi movement in Yemen.
So what are Gulf countries to do? Unfortunately for them and the global economy, analysts at Italian bank UniCredit say their options are limited.
Roughly 20 million barrels of oil per day (mbpd) normally transited the Strait of Hormuz before the war, UniCredit's analysts say.
In a chart they show that other alternatives fail to come close to that, with the Saudi East-West Pipeline able to transport around 5mbpd to the Red Sea, and the UAE’s Abu Dhabi Crude Oil Pipeline less than 2mbpd.
