Pipelines could insulate over 60% of Hormuz oil flows by 2028

The projects they consider are: the already-under construction West–East Pipeline in the UAE and the Basra–Haditha Pipeline in Iraq, the restoration of the Kirkuk–Baniyas Pipeline in Iraq/Syria, currently wholly in the planning phase, and four potential future projects — expanding capacity at Yanbu port and of the East–West Pipeline itself in Saudi Arabia, construction of the Hamriyah–Fujairah Pipeline in the UAE, and restoration of the Kirkuk–Ceyhan Pipeline in Iraq/Turkey.

Everyone has been dusting off their charts showing shipping through the Strait of Hormuz again, but Goldman Sachs had a note out over the weekend arguing that in the medium to long-term what now is a crucial global chokepoint could lose some of its significance.

They've taken a look at seven Middle East pipelines that are under construction, being planned or potentially restored, and calculate that by end-2027 those pipelines will insulate over 45% of pre-war Gulf producers' oil exports from a future Hormuz shock, and more than 60% by end-2028.

On their sums, there are currently 6.9 million barrels per day of oil going through pipes bypassing Hormuz, and they see 3.8 mb/d added by end-2027, and a further 3.5 mb/d by end-2028. That takes the total to 14.2 mb/d, and gives them the over 60% of the total.

Clearly such estimates depend on several assumptions. Under Goldman's "accelerated scenario" pipeline capacity will insulate 75% of exports by end-2028, though a conservative scenario sees it at 45%.