The race is on for Iraq and the United Arab Emirates to secure alternative oil pipelines as the Strait of Hormuz remains closed, highlighting their dependence on Persian Gulf exports. This critical juncture underscores the need for strategic diversification in the oil industry.
Iraq's recent cabinet approval to accelerate crude exports through the Kurdistan-Turkey pipeline network is a significant step. This move aims to triple shipments from 220,000 barrels per day to 770,000, offering a vital alternative route. The pipeline's full capacity will provide much-needed relief to Iraq's oil-dependent economy, which contributed 53% to its real GDP in 2025, according to the World Bank.
However, the situation is more complex for Iraq due to its geographical dependence on Hormuz. As QuantCube Technology's data reveals, Iraq's overall exports have virtually dried up since the war began. This dependence on a single chokepoint makes Iraq vulnerable to disruptions. The country's exports through Hormuz dropped from 93 million barrels in April before the war to just 10 million barrels in April of this year.
In contrast, the UAE has the Fujairah terminal, which, despite potential damage during the war, still offers infrastructure and vessels to export a significant amount of oil. The UAE's West-East pipeline project, expected to be completed in 2027, will double ADNOC's export capacity, providing a crucial alternative. However, existing alternatives are not without risks.
The Saudi East-West pipeline was attacked by Iran, and Fujairah's terminal has faced Iranian drone attacks, disrupting oil loading operations. The combined capacity of these pipelines is estimated at 3.5 to 5.5 million barrels per day, but this falls far short of the prewar daily volume of 20 million barrels. Developing alternative routes requires massive investment and time, often involving transnational agreements.
The Strait of Hormuz remains a critical bottleneck, with vessel transits significantly below prewar levels. Vessels risk attack by Iranian forces and U.S. sanctions if they cooperate with Iran. This complex situation underscores the need for strategic diversification in the oil industry, as both Iraq and the UAE strive to secure their energy future.
