Middle East Oil Crisis: Iraq and UAE Accelerate Alternative Pipeline Projects as Strait of Hormuz Exports Grind to a Halt

Amid escalating regional tensions, Iraq and the United Arab Emirates are racing to expand their oil pipeline networks, seeking to bypass the increasingly perilous Strait of Hormuz. New data starkly underscores the region's heavy reliance on the Persian Gulf chokepoint, which has seen critical export routes effectively shut down.

Iraq, whose economy saw oil contribute over half of its real GDP in 2025 according to the World Bank, is particularly vulnerable. Last week, Baghdad's cabinet approved urgent plans to significantly boost crude exports via the Kurdistan-Turkey pipeline network. This strategic move aims to more than triple existing shipments from 220,000 barrels per day (bpd) to 770,000 bpd. This northern route offers a vital alternative passage through Kurdistan to Turkey's Mediterranean port of Ceyhan, promising some relief for Iraq's oil-dependent economy.

Economic intelligence provider QuantCube Technology's exclusive data reveals a grim picture: Iraq's overall exports have virtually ceased since the conflict began, a direct consequence of its geographical reliance on Hormuz. QuantCube's indicator, measuring the volume of deadweight tonnage from Iraqi and UAE ports, confirms a dramatic drop in cargo movement.

Alan Lemangnen, a senior economist at QuantCube, commented, "Iraq is in a much more complicated situation because we know that most, if not all of its oil, transits through Hormuz." This was evident in Iraq's May 16 announcement of exporting only 10 million barrels of oil through Hormuz in April, a drastic fall from the pre-war figure of 93 million barrels.

A chart illustrating the significant drop in shipping traffic from Iraqi and UAE ports since the conflict began.

QuantCube Technology

Not to be outdone, Abu Dhabi is also fast-tracking the construction of its new West-East pipeline to Fujairah. This ambitious project, expected to be operational by 2027, will double the export capacity of the Abu Dhabi National Oil Company (ADNOC), providing another crucial route to bypass the Strait of Hormuz. Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan emphasized the need for accelerated delivery on May 15, citing rising global energy demand.

While the UAE possesses other export terminals, mitigating some of the immediate impact of Hormuz's closure, these alternatives are not without risk. Saudi Arabia's East-West pipeline, a crucial link from processing facilities near the Persian Gulf to a Red Sea export hub, was attacked by Iran in April. Similarly, the Fujairah terminal has faced Iranian drone attacks, disrupting oil loading operations.

The combined capacity of Saudi's East-West pipeline (which Saudi Arabia reported pumping 7 mb/d in March) and the UAE pipeline to Fujairah is estimated by the IEA to be between 3.5 to 5.5 million barrels per day. However, this pales in comparison to the roughly 20 million barrels of oil and petroleum products that transited through the Strait of Hormuz daily before the conflict.

Developing these alternative export routes is a massive undertaking, requiring not only substantial financial investment but also significant time, often necessitating complex transnational agreements. Meanwhile, ship transits through Hormuz remain drastically below pre-war levels, hitting a new low in May, according to Lloyd's List. Vessels attempting passage through the Gulf face the dual threat of Iranian forces without Tehran's approval or U.S. sanctions for cooperation with Iran.

The current situation underscores the urgent need for diversification in the Middle East's energy export infrastructure, as nations grapple with unprecedented security challenges to vital global oil supplies.