The Gulf’s Energy Escape Routes Cannot Carry a Wider War

Saudi Arabia’s East-West pipeline has restarted, but the crucial next step is still missing: renewed tanker loadings at its Red Sea outlet. On September 24, Reuters reported that pumping volumes were increasing while crude loadings at Yanbu had yet to resume. The same day, Saudi authorities reported intercepting six Houthi missiles aimed at Taif and Yanbu, while American and Iranian negotiators explored an agreement to reopen Gulf shipping. Diplomacy is moving again; delivered oil has not necessarily followed. Reuters’ reporting¹ makes that distinction unusually clear.

That missing link is central to whether alternative pipelines, ports and shipping routes can protect consumers from simultaneous Gulf and Red Sea disruptions. I would treat these routes as emergency relief, not reliable substitutes for normal trade. Their demonstrated achievements are substantial. But the evidence now shows physical supply losses despite those adaptations, and damage to the infrastructure doing the adapting.

The attacks need separating before the barrels can be counted. Saudi Arabia attributed the September 11 drone attack that shut its East-West pipeline to Iraqi militia, not Yemen’s Iran-backed Houthi movement. Three pumping stations were damaged, according to satellite imagery and industry sources cited by Reuters on September 22². The restart was at a low rate; sources estimated full restoration could take up to six or eight weeks. Those are repair estimates, not promised completion dates. Separately, Saudi authorities said³ Houthi attempts to strike civilian infrastructure in Yanbu on September 19 were thwarted. Attempted attacks cannot be booked as destroyed capacity.

The prewar arithmetic already imposed a hard limit. The Strait of Hormuz, the narrow outlet connecting the Persian Gulf with the Gulf of Oman, carried about 20 million barrels of oil daily in 2025. The International Energy Agency estimated only 3.5 million to 5.5 million barrels a day of available Saudi and Emirati bypass capacity, subject to operating and export constraints. That is roughly one-fifth to one-quarter of the exposed flow, calculated from the agency’s figures⁴. Existing pipeline shipments cannot also be counted as spare capacity.

There is nevertheless a serious case for confidence in the wider system: pipelines need not replace everything if inventories, other producers and refineries collectively close the gap. The IEA’s June assessment⁵ documented Yanbu exports rising from 2 million barrels daily before the war to more than 5 million in early June, while the UAE bypass enabled 1.8 million daily. Emergency stock releases supplied another 2.5 million barrels a day in May. Atlantic suppliers increased exports and refiners adjusted production. These were real deliveries, although they describe different periods and cannot simply be added into a September supply guarantee.

The same assessment limits that optimistic reading. Global inventories were falling by an average 3.8 million barrels daily, and the IEA projected second-quarter consumption almost 5 million barrels a day below a year earlier. Its account therefore describes successful mitigation alongside severe stress, not preservation of normal consumption. I would not count a factory using less fuel because it cannot afford production as evidence that supply needs were met. The IEA explicitly described emergency releases as temporary relief⁵.

More recent evidence is worse. The U.S. Energy Information Administration’s September outlook⁶ estimated that disrupted Middle Eastern crude production rose from 5 million barrels daily in July to 6.7 million in August. It also reported that Yanbu exports approximately halved between those months. Both developments preceded the September pipeline shutdown. This is why I reject the claim that the crisis is principally an insurance premium or a nervous market anticipating trouble: production and exports were already being lost.

Shipping ingenuity still matters. Saudi cargoes can travel north from Yanbu through the Suez Canal or Egypt’s cross-country oil pipeline, then around Africa toward Asia, avoiding the dangerous southern Red Sea passage. S&P Global’s tracking⁷ found this routing accounted for 58% of the Saudi-to-Asia flows it tracked in August, excluding Hormuz shipments, against 5% in July. It adds at least three weeks. That is a workable detour for loaded cargo, but it cannot compensate for a broken pumping station upstream.

The commercial penalty is measurable, too. S&P’s freight index for a specified class of very large crude tanker rose from about $519,000 daily on September 1 to $971,000 on September 16. Its September 17 assessment⁷ recorded no such tankers crossing the southern Red Sea strait since September 9. Longer voyages preserve some deliveries while tying up ships for longer, pushing costs onto subsequent cargoes.

Insurance adds a distinct constraint. War-risk insurance covers conflict-related maritime losses; in July, broker Marsh reported additional premiums for the region rising from 1–3% of vessel value weeks earlier to 7.5–10%, alongside growing underwriter reluctance. Those historical quotations⁸ are not September prices. They demonstrate why intact infrastructure can still lack willing carriers. Conversely, September 24 oil prices retreated from intraday highs after news of negotiations, according to Reuters¹. Expectations can change much faster than loading schedules.

Exposure differs sharply by buyer. China and India received 44% of Hormuz crude exports in 2025, according to the IEA⁴. China’s stockpile has allowed it to reduce imports, cushioning global competition, as AP reported in September⁹. India also has alternatives: Reuters’ September trade analysis¹⁰ put Russian deliveries at about 2.1 million barrels daily in August and described Emirati sales from terminals outside Hormuz. But some of that oil first travelled through the strait on shuttle vessels. An alternative loading port does not necessarily remove the original transit risk.

Gas deserves a separate verdict. Liquefied natural gas, or LNG, is gas chilled for transport by ship, and Gulf exporters lack an equivalent bypass for those cargoes. Almost one-fifth of global LNG exports was exposed to Hormuz, while Bangladesh, India and Pakistan obtained almost two-thirds of their LNG through it in 2025, according to the IEA⁴.

Replacement supplies have nevertheless been impressive. Kpler’s September 10 analysis¹¹ found non-Qatari deliveries offset around 91% of the year-on-year decline in Qatari shipments to major Asian markets during July and August, led by flexible U.S. cargoes. Japanese utility inventories were comparatively strong; South Korean stocks were below expectations. That argues against declaring either country on the verge of exhaustion, while showing why contracts permitting cargo diversion matter only when they produce arrivals.

The harshest affordability pressure falls on poorer buyers. Kpler reported Bangladesh awarding two cargoes at $26.67–28 per million British thermal units, while two Pakistani tenders went unawarded at similar prices. Pakistan also needed less LNG because coal and hydropower generation were stronger, so those tenders alone do not establish forced shortages. But the procurement contrast¹¹ shows why aggregate replacement volumes cannot establish universal protection.

For Bangladesh’s energy planners, I would therefore put finance for replacement deliveries alongside physical access in any emergency plan. A route that keeps a cargo moving has accomplished something important; it has not protected a consumer who can no longer afford to buy it.