Oil’s Gulf Bypasses Work, Until the War Follows Them

Saudi Arabia’s emergency oil route now needs an escape route of its own. On September 11, the kingdom announced a precautionary shutdown of its East-West pipeline after drone attacks the previous morning. The line had helped sustain exports during the US-Iran war by carrying crude across Saudi Arabia to the Red Sea, avoiding the threatened Strait of Hormuz. Reuters reported on September 12 that both Baghdad and Riyadh said the drones originated in Iraq. The immediate question is how much protection remains when the infrastructure built to bypass one conflict zone becomes a target itself. (za.investing.com¹)

The territorial news needs precision. The United Nations’ envoy for Yemen told the Security Council on September 10 that the Houthis, Yemen’s Iran-backed armed movement, had gained control of Mokha, while fighting continued. Mayun island’s capture was subsequently reported by officials from both the Houthis and Yemen’s internationally recognized government. That is corroborated reporting, rather than an independently surveyed map of control. Separately, satellite images published by ABC showed fire damage along the pipeline’s general route near Medina. Those images support evidence of an infrastructure incident, but cannot establish its duration or lost throughput. (osesgy.unmissions.org)

Nor does territorial control establish that all shipping has stopped. Lloyd’s List Intelligence counted 91 tanker transits through Bab el-Mandeb, the passage connecting the Red Sea and Gulf of Aden, during August 31–September 6, against 88 the previous week. Those observations precede the latest advances; they cannot establish conditions afterward. They do establish that a threatened passage and a closed passage are different claims. The tracker also warns that movements by ships traveling without detectable tracking signals can require retrospective revisions. (lmiu.lloydslist.com)

There is a substantial case for confidence in the alternatives. The International Energy Agency, or IEA, reported that Saudi exports through Yanbu rose from 2 million barrels a day before the war to more than 5 million in early June. Its June assessment also credited the United Arab Emirates’ pipeline to Fujairah with enabling exports of 1.8 million barrels daily outside Hormuz. These were functioning adaptations, not reassuring lines drawn on a map. Any claim that bypass infrastructure provides negligible protection has to account for those barrels. (iea.org⁵)

I read that record as evidence of valuable but narrow protection: bypasses can soften a short interruption considerably, yet they cannot reliably insulate consumers from simultaneous, sustained disruption. Their success depends on the destination, the ships available and the continued operation of a small number of exposed facilities. Export growth alone cannot settle whether that protection is sufficient. (iea.org⁵)

Geography gives Europe a real advantage. Yanbu cargoes can sail north through Suez, or use Egypt’s pipeline connection to the Mediterranean, without traversing either threatened strait. Asia-bound cargoes taking that northern exit must then travel around Africa. Kpler told AP that the workaround increases the voyage to South Korea from 24 to 54 days. Keeping the cargo moving therefore preserves very different delivery services for European and Asian buyers. (apnews.com⁶)

Capacity imposes another limit. In February, the IEA estimated 3.5–5.5 million barrels a day of additional Saudi and Emirati bypass capacity, against roughly 20 million barrels of crude and products normally passing through Hormuz, the Gulf’s outlet to the open ocean. That amounts to approximately 18–28%, calculated from those figures. “Spare pipeline capacity” means additional usable throughput above existing flows, with terminals also constraining exports. It does not mean the entire advertised capacity is waiting unused. (iea.blob.core.windows.net⁷)

The Saudi system’s design capacity was 5 million barrels daily; a reported expansion to 7 million had not demonstrated sustained operation when the February assessment was written. Fujairah’s pipeline was already carrying about 1.1 million against reported capacity near 1.8 million. June’s performance demonstrated greater use, but neither February’s spare-capacity estimate nor June’s exports establishes what remains available after September’s attacks. The crude pipelines also cannot directly replace the roughly 5 million barrels of petroleum products that passed through Hormuz daily in 2025. (iea.blob.core.windows.net⁷)

The vulnerability extends beyond the pipe. Lloyd’s List Intelligence reported that a Saudi-owned supertanker was hit off Yanbu on August 24. Its September 3 assessment described cargoes being partially loaded at Yanbu and topped up in the Mediterranean, tying up ships for longer. The US Energy Information Administration explains the underlying constraint: longer voyages require more vessels to preserve the same delivery schedule. My inference is straightforward: without replacement ships or accessible stocks, refinery receipts can fall before production does. (lloydslistintelligence.com⁸)

Transport costs must nevertheless be distinguished from missing oil. During the earlier Red Sea disruption, four product-tanker freight rates rose an average 20% in December 2023, while Brent fell from $82 before the attacks to $79 on January 18, 2024. That historical comparison demonstrates that shipping stress need not produce a matching crude-price increase; it does not prove that today’s shock is mostly freight. (eia.gov⁹)

This summer’s evidence shows costs and availability deteriorating together. Platts assessed Yanbu–Far East supertanker freight at $66.87 per metric ton on July 28, up 83.6% in a week. S&P Global also reported that some insurers suspended war-risk cargo cover for Saudi-linked ships. Replacement crude became dearer too: Russian ESPO cargoes delivered to Shandong moved from a $4-a-barrel discount to Brent in mid-July for August delivery to a premium of 50 cents–$1 for September delivery. These are dated route and cargo observations, not a complete decomposition of consumer prices. (spglobal.com¹⁰)

Actual production losses now rule out a reassuring logistics-only explanation. The IEA’s September 11 report estimated that more than 10 million barrels a day of Gulf output remained shut in during August. It recorded North Sea Dated crude at $113.48 on September 9, compared with an August average of $91, and Gulf exports of refined products and liquefied petroleum gas nearly 60% below February. Freight, physical shortages and expectations overlap here; those figures cannot assign each a precise share of the price increase. (iea.org¹¹)

Substitution helps selectively. S&P Global reported that India increased purchases from the UAE and Brazil, while some Chinese independent refiners replaced regular Middle Eastern cargoes with cheaper Iranian barrels. That demonstrates flexibility, not universal interchangeability. An EIA refinery study explains why replacing heavier crude with lighter oil can reduce operating efficiency and change the mix of finished fuels. Conversely, the IEA documented higher European jet-fuel yields and increased Nigerian exports during the crisis: importing a replacement product can sometimes work better than forcing a different crude through an ill-suited refinery. (spglobal.com¹⁰)

Stocks have also delivered genuine relief. Coordinated emergency releases were adding 2.5 million barrels daily to the market in May. By August, however, observed global inventories had fallen 507 million barrels since February. That drawdown measures oil supplied from storage, not the reserves still accessible to a particular importer. It supports no universal promise of another fortnight or three months of protection. (iea.org⁵)

To call the alternatives reliable consumer protection would require believing that sufficient ships, compatible replacement supplies and accessible inventories can keep compensating while the bypass infrastructure itself is attacked. I do not think the evidence supports that confidence. The pipelines have earned their value through substantial exports; they have not earned a promise that consumers can endure a widening war at little more than the cost of a longer voyage. (iea.org⁵)