After Hormuz: Why the world won’t go back to “normal”

Before this closure

At steady state before the war, on the order of 20 million barrels per day of crude and several million barrels of products transited Hormuz, plus roughly a fifth of global LNG trade, according to recent official flow estimates. The war has exposed a structural deficit: even if governments push every existing bypass pipeline to its practical limit, realistic alternative routes cover only mid‑single‑digit millions of barrels per day. That leaves a double‑digit gap that no near‑term infrastructure programme can close. From an intelligence perspective, the more serious vulnerability sits with gas, not oil. For LNG, there is effectively no physical bypass at all.

The honest audit: what really bypasses Hormuz

Only two Gulf producers currently have meaningful bypass infrastructure: Saudi Arabia and the UAE.

Saudi East–West (Petroline). The East–West system connects Abqaiq to Yanbu on the Red Sea and now operates with a nameplate capacity of around 7 million bpd. In practice, a significant slice of that capacity feeds domestic west‑coast refineries and port infrastructure at Yanbu constrains how much can be loaded for export at any one time. Crude bound for Asia must then transit the Red Sea and Bab el‑Mandeb, where Houthi attacks have kept war‑risk premia elevated since 2023.

UAE Habshan–Fujairah (ADCOP). ADCOP can move around 1.5–1.8 million bpd from Abu Dhabi’s fields to Fujairah on the Gulf of Oman. Much of that capacity was already in routine use pre‑crisis; spare headroom was in the hundreds of thousands of barrels per day, not millions. ADNOC’s mooted second line would roughly double bypass capacity over time, but it is a medium‑term project.

Oman. Oman is a “natural bypass”: its exports already leave from Indian Ocean ports at Duqm, Salalah and Sohar, outside Hormuz. The country’s role in this crisis is less about its own volumes and more about geography: it is the most obvious landfall for any future pipelines that seek to get Gulf or Iraqi crude to blue water without touching the Strait. That logic is not lost on adversaries; recent drone attacks on Omani fuel storage and the extension of high‑risk insurance classifications to Omani waters underline that “outside Hormuz” does not mean “outside the conflict”.

Pipelines from Iraq to Türkiye’s Ceyhan, from Iran to Jask on the Gulf of Oman, and westward routes towards Syria are either non‑operational, disputed, or commercially marginal. Egypt’s SUMED line, at roughly 2.5 million bpd, is a valuable link between the Red Sea and the Mediterranean, but it is not a direct Hormuz bypass; it relies on crude reaching the Red Sea in the first place.

Once you strip out theoretical capacities, domestic refinery demand, port bottlenecks and non‑operational lines, the honest picture is more modest. Nameplate bypass capacity across Saudi Arabia and the UAE sits in the high single‑digit millions of barrels per day, but realistic spare capacity available to divert flows away from the Strait at short notice is closer to 2½–3 million bpd. Against pre‑war flows of roughly 20 million bpd of crude, these pipelines remain crucial shock absorbers – but they are not substitutes.

Table 1: Hormuz bypass routes — nameplate vs realistic spare capacity and secondary risks

Figures rounded; future projects illustrative, not commitments. Spare bypass capacity represents incremental volumes available at short notice above pre-crisis utilisation.

The LNG problem: no bypass, slow restart

Most crude‑focused commentary still underweights the LNG dimension.

Qatar, which accounts for just under a fifth of global LNG exports, ships everything from Ras Laffan through Hormuz. There is no pipeline from North Field to an Indian Ocean outlet, no overland export route, and no equivalent to the East–West or ADCOP lines. When Ras Laffan goes dark, there is no physical workaround – and bringing liquefaction trains back from a cold shut‑in is a weeks‑to‑months exercise, not a flip of a switch.

US LNG plants are already running near technical limits, so the “swing producer” option that exists for oil is far more constrained for gas. There is also no “strategic LNG reserve” analogue: OECD stockpiling frameworks apply to oil, not gas. On the oil side, the chokepoint also matters for refined products: Europe now leans heavily on Middle Eastern diesel and jet fuel, so a prolonged closure and forces refiners in Europe, India and the US Gulf into hard trade‑offs. In the near term, non-Gulf exporters from the Atlantic Basin – US shale, Norway, West Africa, Russia into Asia – capture a pricing uplift as Gulf barrels are constrained.

From a risk standpoint, that matters more than many admit. Europe has spent the past three years reducing exposure to Russian pipeline gas by increasing dependence on Qatari and US LNG. The net result is that a large share of Europe’s marginal gas security now depends on a single maritime corridor that currently has no bypass. That is not just a climate or pricing issue; it is a structural energy‑security liability. Tehran understands that better than most. 

Under‑discussed options: Oman and new corridors

There are, however, bypass options that deserve more prominence – even if they are measured in years, not months.

Oman as Indian Ocean hub. The Ras Markaz crude storage complex near Duqm is being developed towards a potential 200 million barrel capacity and has already been used by Iraq’s SOMO for Basra crude storage under 2025 agreements. Concepts under active discussion include pipelines from southern Iraq to Ras Markaz (overland or subsea) and a GCC‑wide spine taking Kuwaiti and Saudi crude to the Arabian Sea. These ideas are at MoU and feasibility stage, but the strategic direction of travel is clear.

Reactivated Iraq–Jordan and Iraq–Saudi routes. Baghdad has revisited the long‑mooted pipeline to Jordan’s Aqaba and talked about restoring older links through Saudi territory to Red Sea ports. Technically, both are feasible. Politically and commercially, they are complex and slow. As with the Oman corridor, the realistic timelines are mid‑to‑late decade, not this electoral cycle.

Additional UAE capacity. If ADNOC’s second Fujairah line proceeds on an accelerated schedule, combined bypass capacity from the UAE could reach the low‑to‑mid‑3 million bpd range, expanding the “shock absorber” cushion even if Hormuz remains indispensable.

How governments will think: three horizons

In our Corporate and Risk Intelligence practice, we don’t build single forecasts; we maintain competing pathways – rapid normalisation, persistent risk premium, and structural re‑routing – and update their probabilities as genuinely diagnostic evidence appears. Across those scenarios, we assess government responses are likely to cluster along three time horizons.

History argues for caution before declaring any chokepoint crisis a turning point. The 1980s tanker war, Iraq’s 1990 invasion of Kuwait and the 2019 Abqaiq attack all produced sharp price spikes followed by rapid reversion towards the previous trading patterns once the immediate threat receded. The question this time is not whether flows resume – they will – but whether the combination of an insurance‑driven shutdown, the LNG dimension and a post‑Ukraine energy‑security mindset leaves governments willing to simply go back to business as usual.

Horizon 1: 0–2 years – maximise what exists. Expect producers to push existing pipelines hard, use leased storage and strategic stock draws to smooth flows, and rely on naval escorts and emergency insurance arrangements to coax ships back through Hormuz. In the near term, the real gating factor is not just physical security but whether voyages are insurable at all: leading P&I clubs and war‑risk underwriters have cancelled or sharply curtailed cover across the Gulf, with reinstatement only available at very high premia. Until a credible escort regime and an insurable framework are in place, many owners simply will not send hulls into the Strait, however high the spot price. Strategic stock releases can soften the initial shock, but for most importers they cover weeks, not months, at normal drawdown rates.

Horizon 2: 2–7 years – build redundancy and diversify supply. New pipeline corridors to the Red Sea, Mediterranean and Indian Ocean – including revived Iraq–Jordan and Iraq–Saudi concepts and an Iraq–Oman spine to Duqm – plus incremental UAE and Omani infrastructure and expanded storage outside the Gulf will all move from talking points to funded projects. Realistically, most of these only deliver meaningful extra barrels in the second half of this decade. Importers – especially in Asia – will lean harder into Atlantic Basin and African crude, accepting higher freight and a structural risk premium as the price of reduced concentration. Even if volumes recover, the pricing architecture will not be what it was: war‑risk premia in the Gulf are unlikely to return fully to pre‑crisis levels, and within OPEC+ there will be a growing split between members with bypass options and those still fully hostage to Hormuz.

Horizon 3: 5-15+ years – reduce demand structurally. Over the longer term, the most reliable way to reduce exposure to maritime chokepoints is to reduce oil demand for transport and gas demand for heating and power. The IEA still expects EVs to displace around 5 million bpd of oil demand by 2030 – already revised down from 6 million bpd as policy rollbacks, affordability concerns and slower uptake bite in Europe and parts of North America – and roughly 10 million bpd by 2035. Heat pumps and renewables do similar work on gas, but here too the politics is getting harder: across Europe, governments are facing growing backlash against high‑cost net‑zero policies, and several have already slowed or re‑sequenced targets. That doesn’t solve the next five years, and it won’t eliminate fossil fuels, but even a “frictional” transition still changes the 2035-2040 equation fundamentally by lowering the volume of energy that has to transit chokepoints like Hormuz. In other words, the world is unlikely to “transition away” from oil and gas in the strong sense; what’s more realistic is a long, uneven process of using fewer barrels and molecules to buy the same unit of GDP. That still matters enormously for energy‑security risk, because every million barrels of demand avoided is a million barrels that does not have to squeeze through Hormuz.

For Tokyo, Seoul, New Delhi and Beijing, this is not an abstract debate. For Tokyo and Seoul, Japan still sources around 95% of its crude from the Middle East, with roughly 70% of those barrels coming through Hormuz, and South Korea’s profile is similar. The lesson they draw from this crisis will be more existential than the lesson drawn in Washington or Brussels. Expect Asian industrial and energy policy – rather than Western rhetoric – to be the sharpest edge of the post‑Hormuz restructuring. For China, the picture is more ambiguous. It is both structurally exposed – heavily dependent on imported oil and LNG, much of it via Hormuz and Malacca – and a potential strategic beneficiary if US forces are tied down in the Gulf while Indo‑Pacific posture is quietly diluted. The same physical‑economy cascades this crisis has exposed – from fertiliser and sulphur through copper to grids and semiconductors – also bite into the energy and compute base China needs to close the gap with the US, so any “windfall” comes with real constraints.

How this analysis is built

One final point. We assume every source in this space has an agenda – producers, consumers, think‑tanks, brokers, even prediction markets. We classify and grade them separately, trace apparent corroboration back to its origin, and only describe an assessment as “high confidence” when government and corporate claims are independently supported by shipping, pricing and open‑source data. On LNG bypass options, for example, that corroboration does not exist today, which is why we treat them as low‑confidence scenarios. The three horizons are not forecasts in the actuarial sense; they are structured ways of thinking about how governments behave under repeated constraint.

In energy terms, the Strait will reopen. In risk terms, the world has just had a very expensive demonstration of how little slack the system really has – and that is not something markets or policymakers will forget quickly.