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Gulf oil exporters pivot to alternative routes as Iran maintains grip on Strait of Hormuz

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While the declaration of a ceasefire between the US and Iran has provided immediate relief to global oil markets, the shocks originating from the Strait of Hormuz are driving Gulf nations to intensify their search for alternative export routes.

In an analysis for Semafor, Amena Bakr, the head of Middle East Energy and OPEC+ research at Kpler, argues that although the ceasefire creates an impression that the worst has passed, the reality is that Iran has established a level of dominance over global oil flows that did not exist prior to the conflict.

According to Bakr, energy exporters in the Gulf are consequently evaluating their options to bypass Tehran’s control.

Flows through the Strait of Hormuz remain significantly below pre-war levels. According to Kpler data, approximately 300 million barrels of crude oil have been lost from the global balance. Across the Gulf, roughly 11.5 million barrels per day (bpd) of production remains offline. Even if the conflict were to conclude today with a permanent peace agreement, oil prices are expected to hover around $90 per barrel.

The reason, according to Bakr, is straightforward: the fighting may have ceased, but the supply shock persists. Approximately 187 tankers carrying nearly 170 million barrels of crude remain stranded in the Gulf. At current rates following the ceasefire, it will take more than two weeks to offload these vessels, and there are few signs that empty tankers are entering the region to take on new cargo.

The author notes that Iran’s Islamic Revolutionary Guard Corps (IRGC) has demonstrated its capacity to disrupt maritime shipping, delay cargoes, and dictate transit conditions. Kpler data indicates that Tehran has targeted ships and ports on at least 21 occasions.

Shipowners informed Bakr that following the ceasefire, their crews received messages stating they must obtain transit permission from the IRGC or face potential attack. Those with vessels currently stranded in the Gulf are avoiding communication with the group for compliance reasons, as the IRGC is sanctioned as a terrorist organization by both the US and the European Union.

Iranian officials maintain that control over the strait was a component of the ceasefire agreement reached with Washington. Meanwhile, US President Donald Trump has repeatedly asserted that his country is not dependent on the waterway and that other nations must step forward to secure the passage.

While some Gulf states are willing to join a coalition to protect the waterway, most have rejected the option of paying transit fees.

Taking a longer-term perspective, Gulf nations are revisiting plans to reduce their reliance on Hormuz. The effectiveness of alternative routes in Saudi Arabia and the United Arab Emirates (UAE) during the conflict has underscored their strategic value.

Expanding pipeline infrastructure is considered critical. The most immediate options involve scaling up existing systems.

Saudi Arabia’s East-West pipeline, which stretches approximately 1,200 kilometers from the Gulf coast to Yanbu on the Red Sea, has a capacity of roughly 7 million bpd. Riyadh is currently weighing capacity increases and terminal expansions to effectively eliminate export bottlenecks caused by the current loading capacity of approximately 5 million bpd. However, these upgrades must be pursued while protecting the existing link, which was damaged in a recent Iranian attack.

The UAE could also expand its route to Fujairah, increasing capacity beyond the Strait of Hormuz from its current level of approximately 1.8 million bpd without facing cross-border infrastructure complications.

Other projects under discussion are more capital-intensive and subject to political considerations. These include the expansion of the Iraq-Türkiye pipeline running from Kirkuk to Ceyhan.

The Basra-Aqaba pipeline to Jordan would provide Iraq with access to the Red Sea but faces significant financing hurdles and other challenges. Discussions have also been revived regarding the reopening of a pipeline that once carried Iraqi crude through Saudi Arabia (IPSA); however, its reactivation depends on political agreements that have proven difficult to secure in the past.

Industry discussions are increasingly focused on building multiple routes rather than relying on a single alternative. A networked pipeline system would allow flows to be diverted during disruptions, reducing dependency on any single corridor.

Nevertheless, the obstacles remain substantial. New pipelines require tens of billions of dollars in capital and years of construction, while also contending with difficult terrain and security concerns.

The historical lack of cross-border energy infrastructure in the region is largely due to projects becoming stalled by disputes over ownership, tariffs, and operations.

Despite these hurdles, Bakr argues that the economic calculus is shifting. Disruptions, surging insurance costs, and uncertainty over access have paralyzed energy and trade flows. For Gulf producers, investing in alternative routes is becoming vital to maintaining access to global markets.

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Israeli envoy warns red line crossed over Turkish moves in Syria

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Israel’s Ambassador to the US, Yechiel Leiter, stated that Tel Aviv received clear intelligence showing Türkiye planned to expand its military presence in Syria significantly, an action Israel deemed the crossing of a “red line.”

Speaking to The Jerusalem Post, Leiter said: “We are not looking for an escalation or a war with either Türkiye or Syria. But a red line was crossed.”

His remarks follow an Israeli air strike on the Abu al-Duhur Airbase in Idlib, Syria, which drew swift criticism from both the Syrian and Turkish governments.

Leiter continued:

“This was seen as a blatant Turkish violation of the understandings. Those who needed access to the intelligence received it. Those who needed to know what was going to happen knew. We made it clear that this was contrary to our understandings, and that is why Israel acted as it did.”

According to Leiter, the failure to heed these warnings led Israel on Tuesday to strike the Abu al-Duhur airbase, where Turkish forces were allegedly expected to arrive.

Syrian officials stated that the airbase was targeted by at least eight strikes, whilst subsequently released satellite imagery revealed damage to the runways.

Leiter stated that the Turkish move contradicted understandings reached during the Biden administration between Israel and the administration of Syria’s new leader, Ahmed al-Sharaa, which “froze the existing situation” in the country.

According to Leiter, these understandings were reaffirmed during a meeting held in Paris in January 2026, attended by Syrian Foreign Minister Asaad al-Shaibani, US Special Envoy for Syria Tom Barrack, Leiter, then-National Security Council head Gil Reich, and Netanyahu’s military secretary Roman Gofman (now director of Mossad).

Leiter continued:

“This freeze means we do not act as long as the Turks do not act, and they do not force us to withdraw. It is also important to understand: whilst we maintain a security zone of only 78 square miles [approximately 202 square kilometres] in Syria, the Turks have, over the past few years, slowly annexed 3,500 square miles in northern Syria—roughly 5% of the country’s territory.”

According to The Jerusalem Post, with the exception of Tom Barrack, the US Special Envoy for Syria and Ambassador to Türkiye, senior US officials did not condemn the Israeli strike in Syria.

“The administration’s policy is that the previously agreed freeze should continue; that is why even Trump did not condemn the strike,” Leiter said.

Despite the tensions, Leiter emphasised Israel’s understanding that Syria is not seeking an escalation or war.

“It is clear to us that the Syrians do not want a confrontation with us. That is why we tell the Turks not to create conflict. There are multiple indications that the move planned by Türkiye was imposed on the Syrians,” the ambassador said.

Leiter argued that this apparent discord was also evident in the conflicting statements issued by Türkiye and Syria following the strike:

“Whilst Syrian Foreign Minister Shaibani acknowledged that a Turkish delegation was in Syria a few days before the strike, the Turks denied this. They need to resolve this matter between themselves.”

Leiter did not rule out a return to direct talks with Syria, as conducted in the past, but said conditions must be suitable.

“Negotiations can be resumed. We want to continue the face-to-face dialogue we previously conducted with the Syrians,” Leiter said.

Leiter added that Israel is not seeking a conflict with Türkiye and remains open to dialogue with Ankara.

“We are certainly open to dialogue with them, but judging by statements from senior officials in the country, they would prefer to wipe Israel off the map,” the Israeli diplomat said.

Alleging that Türkiye hosts Hamas leaders and “channels funds” to Hezbollah and Hamas, Leiter argued that it was inappropriate at this juncture for “Türkiye to begin expanding its influence in Lebanon and Syria.”

Leiter continued:

“Under current conditions, Türkiye cannot be a force that helps bring calm to the region. If only we could return to the state of relations between Jerusalem and Ankara from several decades ago. Back then, we would have been open to Türkiye’s influence in the region. But in an environment where Türkiye funds terrorist organisations, an increase in its regional influence makes no sense.”

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UAE halts trade with Iran after reported ballistic missile attack

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The United Arab Emirates (UAE) has suspended commercial and economic relations with Iran after announcing that Tehran launched two ballistic missiles towards the Gulf state on Tuesday.

The UAE Ministry of Defence stated that air defence systems detected two ballistic missiles launched from Iran towards its territory.

The incident is considered Tehran’s first direct attack targeting the Gulf country since May.

The event prompted emergency telephone alerts to be sent to residents across the UAE.

The Ministry of Defence stated that assessments indicated the missiles targeted maritime traffic, adding that one missile fell into the sea outside UAE territorial waters and the other landed within territorial waters.

The UAE Ministry of Foreign Affairs later announced that “in light of regional tensions that undermine regional and international peace and security, all trade, commercial relations, and financial transactions with Iran have been halted until further notice.”

Iran denied any involvement in the missile attacks. Iranian Foreign Ministry Spokesperson Esmail Baghaei said the claim “contradicts the principle of good neighbourliness and undermines ongoing efforts to strengthen trust among regional countries.”

The missile strikes occurred after a period in which the UAE and Tehran had sought to reduce tensions between the two countries.

The bulk of Tehran’s military retaliation targeted neighbouring Gulf states, which Iran accused of facilitating US-Israeli attacks.

The UAE bore the heaviest brunt of Iran’s attacks against US allies in the Gulf, sustaining nearly 3,000 missile and drone strikes.

Exhibiting the most hawkish stance against Tehran among its Gulf neighbours, the UAE responded with dozens of strikes against Iran.

However, tensions between the UAE and Iran eased following a memorandum of understanding signed between Washington and Tehran in June.

After the agreement began to unravel in early July, Iran largely redirected its attacks towards Bahrain, Kuwait, and Jordan.

In recent months, the UAE reactivated diplomatic and economic channels with Iran while simultaneously strengthening its military ties with Israel and the US.

Tuesday’s missile strikes threaten to disrupt the atmosphere of normalisation that had returned to the UAE.

While Dubai’s financial district was once again filling with bankers, certain commercial activities between the emirate and Iranian ports had resumed.

Furthermore, several Iranian flights to the UAE had quietly resumed.

UAE authorities had also begun permitting the return of approximately 20,000 Iranians holding UAE residency permits who were outside the country when the war began.

UAE officials have repeatedly emphasised that the country seeks to avoid being drawn further into a broader regional war.

Nevertheless, efforts to de-escalate tensions between the UAE and Iran have come under increasing strain in recent weeks.

This month, the UAE accused Iran of attacking vessels belonging to the Abu Dhabi National Oil Company in the Strait of Hormuz.

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US considers land blockade on Iran involving Türkiye and neighbours

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To date, the US has imposed sanctions on thousands of Iranian individuals and legal entities; however, the Tehran administration continues to bypass these restrictions by rapidly establishing new structures to replace those that have been blocked.

In an assessment citing expert opinions published by the Reuters news agency, the current situation was likened to a game of whack-a-mole.

Whack-a-mole is known as a game of agility and reflexes based on the concept of hitting plastic figures with a mallet as they pop up unexpectedly from their holes.

Speaking to the agency, experts outlined other options that Washington could deploy to increase pressure on Tehran and raise the efficacy of sanctions.

Potential measures include restrictions targeting independent Chinese refineries, known as “teapots,” which account for a quarter of China’s oil refining capacity.

China purchases more than 80% of the oil exported by Iran, and these refineries process the vast majority of those shipments. Nevertheless, these facilities have limited ties to the US financial system, rendering them partially protected against secondary sanctions.

Another option on the table is increasing pressure on major Chinese banks. The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has applied secondary sanctions to small firms based in China and Hong Kong accused of executing billions of dollars in transactions for Iranian oil.

The agency has also warned two large banks, though it has not yet included them on its sanctions list.

While taking steps against major banks could deter other financial institutions, such actions carry the risk of Beijing enacting retaliatory measures. Washington seeks to avoid such tension ahead of a potential meeting between US President Donald Trump and Xi Jinping in September.

Experts are also evaluating the possibility of enforcing a land blockade with the participation of Iran’s neighbours: Iraq, Türkiye, Pakistan, Azerbaijan, Turkmenistan, and Armenia.

The Trump administration holds various leverage mechanisms against such nations, including Pakistan, which is requesting a $10 billion swap line, and Türkiye, which seeks to rejoin the F-35 program. Analysts express, however, that implementing such a blockade on the ground and generating the expected pressure inside Iran would be difficult.

Trump has repeatedly voiced threats to impose secondary tariffs on countries that trade with Iran; however, the US Supreme Court struck down the legal basis for such measures.

On the other hand, a anti-Russia “crushing” sanctions bill passed by the Senate includes new restrictions on Iran and grants Trump tariff authority.

This bill must also pass a vote in the House of Representatives; however, the text faces opposition from both Democrats and certain Republican lawmakers.

US Treasury Secretary Scott Bessent announced in mid-August that Trump would disclose new measures designed to raise Iran’s economic isolation to an unprecedented level.

Stating that the US President had instructed the re-establishment of the maximum economic pressure policy against Tehran, Bessent said, “We have moved from Epic Fury to Economic Fury.”

Following Bessent’s statements, Bloomberg noted that Tehran has learned to manage the consequences of a naval blockade and thousands of restrictions. According to the agency’s analysts, the principal obstacle facing Washington is the close economic relationship between Iran and China; indeed, Beijing secures more than 90% of Iranian oil exports. Sanctioning the entities facilitating these purchases would directly reduce Tehran’s oil revenues, yet the US is avoiding this step for now.

Maritime traffic in the Strait of Hormuz remains restricted. On August 11, Iran conveyed its conditions for lifting the blockade in the strait to the US through intermediaries.

Tehran’s conditions included an end to threats and military actions, the lifting of the blockade and sanctions, compensation for damages, and the release of frozen assets.

On August 14, Trump claimed that following the end of the war with Iran, he would declare the Strait of Hormuz to be US territory. Responding to these statements, the Iranian Foreign Ministry warned that the Strait of Hormuz could not be seized “by a tweet, an aircraft carrier, an executive order, or a campaign speech.”

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