Pipelines Won't Save Us From Strait of Hormuz Crisis

The U.S. Treasury Secretary recently promised that new pipelines would render the Strait of Hormuz irrelevant within two years. That’s a fantasy, according to nearly every energy analyst who isn’t working for the government.

Treasury Secretary Scott Bessent claimed that 50% to 70% of energy products would soon bypass the critical shipping route through underground pipelines. But here’s the reality: the biggest projects won’t be ready for years, and even when they are, they won’t move enough oil to replace what normally flows through the strait.

The International Energy Agency paints a sobering picture. Before the Iran conflict escalated in February, about 20 million barrels per day passed through the Strait of Hormuz. Even after all planned pipeline expansions come online, only about 10 to 12 million barrels daily could be rerouted. That’s a gap of roughly 50%.

The Timeline Problem

The UAE expects a $3 billion pipeline expansion to its port of Fujairah by next year. Sounds promising, right? But Saudi Arabia’s larger pipeline project will take several more years. And Iraq’s various pipeline proposals, including a 600-mile route to Turkey and potential connections to Jordan and Syria, remain stuck in disputes between countries and internal political friction.

“The pipeline projects won’t be finished in time to help consumers if Hormuz doesn’t open, period,” explains Robert McNally, who served as senior director for international energy under President George W. Bush. “And even if all of them were built in time, which is impossible, they could still be hit by Iran.”

Iran has already demonstrated its willingness to target redirected routes. This isn’t theoretical risk. It’s a demonstrated capability.

Liquefied Gas Has No Workaround

Here’s where things get really troubling: liquefied natural gas can’t move through pipelines at all. Qatar, the world’s second-largest LNG exporter, shares offshore drilling rights with Iran on the South Pars field. This creates an impossible situation for Qatari exports.

“Qatar is either going to have to pay the Iranians a price for getting their exports out or suffer economically,” says David Goldwyn, former U.S. State Department special envoy. “And that has consequences for natural gas prices for the rest of the world.”

This vulnerability extends beyond energy. The news from the International Energy Agency highlights that the Hormuz crisis is disrupting global fertilizer markets, aluminum exports, and supply chains for healthcare and microprocessor manufacturing.

The Cost to Consumers

Global oil prices have repeatedly spiked above $100 per barrel since the conflict escalated. That translates directly into higher gas pump prices, elevated jet fuel costs, and increased food prices due to fertilizer shortages.

“We’re looking at elevated oil, natural gas, and food prices probably for at least the next year,” Goldwyn warns. The disruption is the biggest energy supply shock on record, according to the IEA.

Alternate shipping routes like the Bab el-Mandeb in the Red Sea offer some relief, but this chokepoint isn’t without problems either. Yemen’s Iran-backed Houthi rebels have attacked ships in these waters, adding another layer of vulnerability to global energy flows.

The Renewables Mirage

Some policymakers are hoping renewable energy can cushion the blow. Solar and wind can generate electricity effectively, but transportation presents a different challenge. There’s no viable substitute for diesel and gasoline in heavy equipment vehicles and aircraft, at least not in the next five to eight years.

Some countries are even backtracking toward coal and nuclear power, undoing years of renewable energy progress, just to maintain energy independence.

Verification Is Impossible

What makes this crisis harder to understand is that we can’t even track what’s actually happening. Vessel tracking systems that normally provide transparency have been compromised. Ships are turning off their automatic identification systems to avoid detection or hide shipment origins. Commercial satellite imagery that tanker tracking firms relied on has been restricted by satellite providers at the U.S. government’s request for security reasons.

“Tanker trackers are hobbled by the fact that we no longer have high resolution commercial satellite imagery,” McNally explains. We’ve essentially lost our ability to see what’s moving through one of the world’s most critical energy arteries.

The reality is uncomfortable: bypass routes are helpful but can’t substitute for genuine regional peace. And when the infrastructure does eventually arrive, it will remain vulnerable to the same forces that created this crisis in the first place.

Source: NPR