13SEP

Gulf producers build around the strait

3 min read

13:27UTC

Kuwait said it would raise production as Iraq's Kirkuk-Ceyhan and Saudi Arabia's Yanbu East-West pipelines moved roughly 9 million barrels a day around Hormuz, against the strait's normal 20 million.

← Back to Saudi bypass hit, and Riyadh holds fire Jump to analysis ↓

ConflictDeveloping

Key takeaway

Gulf pipelines route about 9 million barrels a day around Hormuz, under half the strait's normal flow.

Kuwait said it would begin increasing production, and Gulf exporters drew on pipeline routes that skirt the strait of Hormuz entirely: Iraq's Kirkuk-Ceyhan line to Turkey's Mediterranean coast and Saudi Arabia's Yanbu East-West line to the Red Sea ¹. Both run crude out to open water without touching the waterway the IRGC has formally declared closed.

The two pipelines carry roughly 9 million barrels a day between them, against the strait's normal 20 million ². Producers can route under half their oil around Iran's leverage, which is why a closure threat still bites even as the workaround keeps prices calm: the alternatives soften the chokepoint without replacing it.

Three Saudi very large crude carriers reactivated their transponders off Oman on 19 June, the first confirmed commercial crossings since the closure declaration ³. Days earlier those same ships had only been positioned near Hormuz, not transiting ; by 22 June they were moving cargo across the closure line itself, turning a structural hedge for Riyadh and Baghdad into a live one.

Deep Analysis

In plain English

While Iran claims to have closed the Strait of Hormuz, Gulf oil producers have been routing crude through two alternative pipelines that avoid it entirely. One runs from Iraq's Kirkuk oilfields north to Turkey's Mediterranean coast; the other crosses Saudi Arabia from east to west, ending at the Red Sea port of Yanbu. Together these carry roughly 9 million barrels a day. The problem is that this is less than half of what normally goes through Hormuz (about 20 million barrels a day). So the world can get some oil out of the Gulf via these pipelines, but not nearly enough to replace what would normally flow through the strait. That is one reason energy prices remain elevated even as they fall from their peak.

What could happen next?

Consequence
The 9 million barrels per day pipeline ceiling means Asian refiners dependent on Gulf crude face a persistent supply gap until the Oman corridor delivers full restoration; Kuwait's production increase partially offsets this but at reduced margin given sub-$80 Brent.
Precedent
Saudi Aramco's resumption of VLCC transits through the Oman corridor, using AIS transparency rather than dark shipping, establishes a Gulf-producer norm for Hormuz reopening: producers will transit when the route is physically safe, regardless of IRGC declaration status.

Source Landscape

This story draws on neutral-leaning sources from Qatar

Qatar

Kuwait's production increase announcement adds barrels precisely when global markets are still absorbing the Hormuz disruption overhang. Kuwait's estimated budgetary breakeven is lower than Saudi Arabia's (roughly $65-70 per barrel), giving it incentive to maximise volume even at $77.54 Brent.

The three Saudi VLCCs that reactivated AIS transponders and transited via the Gulf of Oman on 19 June (advance on represent Saudi Aramco testing the Oman corridor for its own export programme. Saudi crude transit via Oman rather than the standard Hormuz lane bypasses the PGSA insurance mandate and avoids the IRGC-claimed closure zone, but adds one to two days of transit time and Oman anchorage costs to each voyage.

For downstream Asian buyers, the key variable is whether the combined pipeline-plus-Oman-corridor supply is enough to prevent physical shortages. At approximately 9-11 million barrels per day bypass (vs 20 million normal), roughly half the pre-war Gulf export volume is physically accessible. Asian refiners running at 80-90% of their 2025 Gulf-crude intake are not immediately supply-constrained, but they are running at compressed operational margins.

Consensus view: The Oxford Institute for Energy Studies has documented the structural ceiling on Gulf pipeline bypass capacity in prior Hormuz-risk analyses: Kirkuk-Ceyhan's roughly 600,000-700,000 barrels per day (damaged and intermittent since 2023 PKK attacks on Turkish territory) and Saudi Arabia's Yanbu East-West pipeline at roughly 5 million barrels per day design capacity combine to approximately 9 million barrels per day at best, against Hormuz's normal 20 million barrels per day.

This 45% ceiling is a structural fact, not a temporary constraint.

Counter-view: The Energy Policy Research Foundation (EPRINC) in Washington notes that the bypass calculation excludes the UAE's Habshan-Fujairah pipeline (capacity roughly 1.8 million barrels per day, running from Abu Dhabi to the Fujairah coast outside the Gulf), which brings the combined bypass total closer to 10-11 million barrels per day, or 55% of normal Hormuz flow. Saudi VLCCs reactivating at Hormuz to transit the Oman lane add cargo on top of the pipeline alternative.

Key tension: Whether the combination of pipeline bypass and Oman-corridor tanker transits can supply enough volume to prevent supply-shock pressure on Asian refiners during the 60-day negotiating window, without requiring a full Hormuz commercial reopening.

First Reported In

Update #135 · Trump's threats peak, his paper stays blank

Wikipedia / Kpler· 22 Jun 2026

Read original →

Causes and effects

Caused by

Saudi tankers moved, Hormuz stayed shut

The Saudi VLCCs that were only positioned near Hormuz on 19 June reactivated their transponders and transited with cargo by 22 June, advancing from positioning to confirmed transit.

Occurred 19 Jun 2026

Read story →

This Event

Gulf producers build around the strait

The bypass covers under half of normal flow, capping the panic without removing Iran's leverage.

Led to

The paper says open, water says shut

Gulf producers routing via Oman bypass capped at under half throughput contextualises the 12-ship Hormuz collapse on 22 June.

Occurred 22 Jun 2026

Read story →

Different Perspectives

United States

OFAC gazetted two wind-down licences expiring four days apart and adopted a presumption of denial for new Iran sanctions requests, while the State Department separately sanctioned Kataib Hezbollah and Hezbollah financial networks. Washington is closing legal channels on a published calendar rather than all at once.

United Arab Emirates

Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan met Iran's president in New Delhi, the first known face-to-face since the war began, weeks after cutting all Emirati trade and financial dealings with Iran. Abu Dhabi is running economic pressure and diplomatic contact at the same time.

Houthis

Houthi forces completed the capture of Yemen's Red Sea coast and Mayun island this week, an offensive a Houthi official confirmed alongside Yemeni government officers. The gain locks in the Bab al-Mandeb closure to Saudi crude declared as an embargo on 23 July.

Iran

Foreign Ministry spokesman Esmail Baghaei credited Iranian diplomacy backed by military strength for pushing neighbours to negotiate, citing the Oman safe-passage talks, while addressing none of the pipeline strike, the Iraqi dismissals or Saudi restraint directly.

Iraq

Prime Minister Ali al-Zaidi sacked two Maysan officials, closed and reopened three Iran border crossings inside three days, and approved a joint inquiry with Tehran into the launch site on his own territory. He is managing a militia network he does not fully control rather than confronting it.

Saudi Arabia

Riyadh's Foreign Ministry confirmed the Petroline strike, named no attacker, and said it would hold off retaliating at Iraq's request while reserving the right to act on its own sovereignty. It expects Baghdad's inquiry, not a Saudi strike, to be the next move.