Gulf nations may reduce reliance on Strait of Hormuz in five years

HSBC CEO highlights investment in alternative pipelines amid regional conflicts

Gulf countries could significantly reduce their dependence on the Strait of Hormuz within five years by investing in alternative pipelines and logistics networks, according to HSBC Group Chief Executive Georges Elhedery. Speaking at the HSBC Future Forum in Dubai, Elhedery noted that the ongoing conflict involving Iran has accelerated efforts to develop these alternatives.

Elhedery emphasized the potential for Gulf exporters to have enough transport capacity to bypass Hormuz, a critical maritime passage that handles about a fifth of global oil and liquefied natural gas trade. ‘We do see this region being able to recover and then continue growing. It will mean a lot of investment,’ he said, according to Reuters. ‘But Hormuz, probably in five years’ time, may become redundant,’ he added.

Saudi Arabia is already expanding its East-West pipeline, which carries crude to Red Sea export terminals, from 7 million barrels per day to 10 million within two to three years, as announced by Energy Minister Prince Abdulaziz bin Salman. This expansion would add 3 million barrels per day of capacity, providing an alternative to shipping through Hormuz.

Iraq is considering reviving a pipeline through Syria to access the Mediterranean coast, while Kuwait is pursuing oil storage facilities outside the Middle East. These initiatives, along with DP World’s planned Al Rugaylat and Dibba terminals in Fujairah, could reduce the region’s reliance on Hormuz.

HSBC’s report highlights a $1.4 trillion pipeline of planned infrastructure projects across the Middle East, North Africa, and Turkey, which includes $872 billion in individual project packages. Despite regional conflicts, a survey of over 1,600 business leaders and 820 global institutional investors shows continued interest in the Gulf as an investment destination.

Source: https://gulfnews.com/business/markets/how-strait-of-hormuz-could-become-redundant-within-five-years-1.500718143