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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.

Middle East

Iran resumes ballistic missile assembly using stockpiled parts

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Iran has resumed ballistic missile production in underground facilities, despite statements by Israeli and US authorities asserting that this capacity had been completely eliminated.

According to a report by The Wall Street Journal citing US and Middle Eastern officials, the Tehran administration is utilizing pre-stockpiled components in the manufacturing process.

Officials report that despite strikes on missile sites and industrial installations at the beginning of the war, Iran continues the assembly of both solid- and liquid-fuelled missiles.

Intelligence data indicates activity at numerous underground centres, including the Khojir complex in the southeast of the country, along with efforts to establish additional underground assembly points to protect against new air strikes.

Current assembly operations are being maintained at lower volumes compared with pre-war levels, as US and Israeli operations destroyed several facilities and a naval blockade has impeded the import of components and solid-fuel ingredients.

Assessing the process, Tal Inbar, a senior analyst at the US-based Missile Defense Advocacy Alliance, stressed that damaged infrastructure can be repaired during periods when facilities are not targeted, and parts procured from other countries can be stored there.

Inbar noted that it would be naive to believe Iran is not rebuilding its missile production capacity.

Arguing that the facilities were destroyed and Tehran has suffered severe losses, the official stated that Iran remains weaker than ever before, and US President Donald Trump will never permit the country to acquire nuclear weapons.

Pentagon spokesman Sean Parnell stated that the US has destroyed up to 90% of Iran’s drone, ballistic missile, and naval industrial infrastructure, severely degrading Tehran’s ability to launch missiles and unmanned aerial vehicles.

Another US government official pointed out that the Tehran administration may have revived production, albeit on a low scale, following preliminary talks conducted in mid-June with the Trump administration regarding the opening of the Strait of Hormuz and ending the war. The official noted that existing stockpiles are sufficient to assemble at least two hundred missiles.

A CNN report in late May indicated that the Tehran administration was attempting to reopen underground missile shelters, struck by the US and Israel with costly munitions, using bulldozers and dump trucks.

Excavation activities accelerated after the April ceasefire decision; out of 69 tunnel entrances struck across 18 distinct locations, 50 have been made accessible again.

Experts stressed that it is impossible to destroy missile power solely by bombing tunnel entrances, underlining the limitations of such bombardments.

US Secretary of War Pete Hegseth claimed in April that they had effectively ended Iran’s missile programme. However, an NBC News report noted that Tehran utilized the ceasefire period to reconstitute its military strength.

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Mohammed bin Salman urges Trump to strike Houthis after Mokha falls

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Saudi Crown Prince Mohammed bin Salman has requested that US President Donald Trump launch air strikes against the Houthis in Yemen.

According to two US officials who spoke to Axios, Trump rejected the request, and US officials emphasised that the administration has no plans for direct intervention against the Houthis for now.

Oil prices surged on Thursday after the resistance led by Houthi militias (Ansarallah) seized the strategic coastal city of Mokha in Yemen.

This development brought the Yemeni resistance one step closer to the Bab el-Mandeb Strait, which is vital for global trade and Saudi oil exports.

With Iran already disrupting traffic in the Strait of Hormuz, Houthi control over Bab el-Mandeb could provide Tehran with powerful new leverage over the US and its Gulf allies.

On Thursday, as Houthi forces advanced towards the coastal city of Mokha and Saudi-backed Yemeni forces retreated, bin Salman telephoned Trump to brief him on the deteriorating situation.

A few hours later, the prince called again to request that Trump carry out US air strikes against the Houthis.

Trump declined, but a US official stated that the administration would provide Saudi Arabia with intelligence and targeting data on the Houthis.

The official noted that approximately 200 US military personnel are currently stationed in Saudi Arabia, providing non-military support.

A senior Trump administration official indicated that Washington’s priority is keeping the Red Sea open, while leaving the broader fight to regional partners.

“We are in continuous dialogue with Saudi Arabia and the Government of the Republic of Yemen regarding regional stability,” the official said.

The official continued:

“The US remains focused on protecting our core national security interests, such as ensuring freedom of navigation in the Red Sea, while empowering our regional partners to take the lead in managing and resolving regional security challenges.”

The US is concerned by the rapidly escalating conflict in Yemen and is seeking to avoid direct military intervention while increasing its support for Saudi Arabia.

According to two sources familiar with the matter, Admiral Brad Cooper, Commander of US Central Command (CENTCOM), travelled to Saudi Arabia on Thursday for urgent coordination meetings.

The conflict between Saudi Arabia and Yemeni resistance forces reignited in July after Riyadh blocked an Iranian aircraft carrying senior Houthi officials from landing in Sanaa following their return from Ali Khamenei’s funeral.

Bin Salman requested Trump’s political support to strike Sanaa airport, but made clear that Saudi Arabia did not require US military assistance. Trump granted his support.

The Houthis subsequently retaliated by attacking Saudi tankers in the Red Sea. These strikes threatened a route crucial to the kingdom’s oil exports, and the group later expanded its attacks to Saudi energy facilities.

Saudi Arabia and its Yemeni allies responded with air strikes and ground operations against Houthi positions.

Saudi Arabia’s request for direct US military intervention marks a sharp reversal from July, when Riyadh informed Washington that it could manage the Houthis on its own.

As clashes intensified, the Saudis began seeking progressively greater support from the US.

Sources close to the discussions noted that in recent weeks, US military and civilian officials informed their Saudi counterparts that Trump’s directive is to keep American forces focused on Iran and the Strait of Hormuz, and to avoid opening a new front.

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Middle East

Netanyahu ignored MBZ warning on Hamas 7 October plan, report says

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Israeli Prime Minister Benjamin Netanyahu reportedly ignored a direct warning from UAE President Sheikh Mohamed bin Zayed Al Nahyan in the run-up to 7 October 2023, according to an investigation by the Israeli newspaper Haaretz.

The report states that the UAE leader, widely known as MBZ, was convinced in September 2023 that an explosion was imminent in the region, particularly given the escalating tensions in the West Bank.

Israeli President Isaac Herzog, who maintains close ties with bin Zayed, recounted: “In the months leading up to the war, he spoke with me about this issue frequently. He consistently conveyed the message that the situation needed to be de-escalated. He even dispatched a special envoy to Israel who met with the prime minister. The emir appeared to sense that the region was on the verge of erupting.”

MBZ also engaged in direct discussions with Netanyahu. These exchanges followed a standard operational protocol: a representative from the United Arab Emirates embassy would arrive at the prime minister’s office equipped with a specialised, secure telephone device to ensure confidentiality.

However, according to the newspaper, the call initiated by bin Zayed on this occasion was extraordinary in nature.

A week and a half before 7 October 2023, the UAE ruler placed a call to Netanyahu from the Presidential Palace in Abu Dhabi, and the two leaders spoke for 45 minutes.

During this conversation, bin Zayed warned that Yahya Sinwar, the Hamas leader in Gaza, was planning a major operation against Israel.

Bin Zayed voiced deep concern that such an event would not only lead to significant bloodshed, but would also destabilise the entire region and undermine the Abraham Accords.

Haaretz reported that three senior foreign sources possess direct knowledge of the call’s contents, marking the first public disclosure of the conversation’s existence.

A close Palestinian adviser to bin Zayed, who had emigrated from Gaza to Abu Dhabi years earlier and maintained extensive connections across the Gaza Strip, was also present during the exchange.

According to the adviser, the UAE ruler stressed to Netanyahu that Israel needed to prepare for this specific threat.

The adviser stated:

“The emir explained that, according to his assessment, Sinwar was preparing for a major event. He told Netanyahu that Israel had to be prepared. At the same time, he proposed working towards an economic solution for the Gaza Strip to prevent escalation, alongside calming the situation in the West Bank.”

Bin Zayed urged Netanyahu to take the matter seriously. Yet, to the emir’s surprise, the prime minister reacted with relative calm.

Netanyahu told bin Zayed that, in his own assessment, Hamas was planning to operate in the West Bank area. Reassuring the Emirati leader, Netanyahu insisted that Israel was prepared for any scenario.

The UAE leader later recounted his conversation with Netanyahu and his subsequent warning to CIA Director William J. Burns.

Bin Zayed shared with Burns the intuitive alarm he had sought to convey to Netanyahu—that “something over there is about to blow”—and noted the Israeli prime minister’s conviction that the unstable theatre was in fact the West Bank.

“The emir hoped that, despite Netanyahu’s reserved reaction, he would take the message seriously and take action,” the adviser said.

However, neither anticipated that the prime minister would hear the warning without briefing the heads of his defence and security establishments: neither the director of the Shin Bet, nor the director of the Mossad, nor the chief of staff of the Israel Defence Forces was informed of MBZ’s warning.

Haaretz noted that Gaza-related negotiations between Israel and Hamas had been proceeding smoothly in early 2023, providing the context in which the Emirati ruler’s concerns emerged.

The report received swift corroboration from the Israeli political opposition. Former prime minister and leader of the B’Yachad party, Naftali Bennett, stated that he knew the warning issued by UAE leader Mohamed bin Zayed to Netanyahu concerning Hamas’s plans prior to 7 October was genuine.

Speaking to 103FM, Bennett said: “I am telling you: I know this to be true.”

Bennett continued:

“Mohamed bin Zayed of the UAE warned Netanyahu that Sinwar was planning an operation. The head of the Egyptian General Intelligence Directorate, Abbas Kamel, also notified Netanyahu a few days before the massacre that a major operation was being planned. I do not wish to discuss my sources with anyone. I am telling you: I know this fact to be true.”

Contending that Netanyahu had led Israel “blindly into this horrific disaster,” the opposition figure asserted: “He was so deeply captive to the conception that Hamas was an asset that, despite receiving explicit warnings, he did nothing.”

Bennett maintained that Netanyahu bears direct responsibility for 7 October, not merely by virtue of being prime minister, but because “he spent 15 years strengthening Hamas and doing nothing.”

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