Is Hormuz open? Trump's toll threat speeds Gulf bypass plans
The Strait of Hormuz is not operating normally for strait hormuz oil shipments. Renewed U.S.-Iran tensions and President Donald Trump's proposed 20% cargo toll have revived urgent Gulf bypass plans, as attacks and shipping disruptions expose how heavily producers still depend on the world's most critical energy chokepoint.
Key Takeaways
- Trump's 20% toll threat and U.S.-Iran escalation are accelerating Gulf efforts to route oil and cargo outside Hormuz.
- Saudi Arabia and the UAE are leaning on existing bypass infrastructure, including the East-West pipeline and export routes on the Gulf of Oman.
- DP World is in talks to build a new Fujairah port and container terminal to reduce reliance on Jebel Ali.
- Only Saudi Arabia and the UAE have operational crude pipelines that can bypass Hormuz, with an estimated 3.5 million to 5.5 million barrels per day of spare capacity, per the IEA.
- Kuwait, Iraq and Qatar remain heavily exposed, and alternative routes cannot absorb all stranded crude and LNG in a prolonged closure.
Why is Trump's Hormuz toll threat escalating tensions?
President Donald Trump's threat to impose a 20% fee on cargo passing through the Strait of Hormuz, alongside renewed U.S.-Iran fighting, has revived the Gulf's urgent search for oil export alternatives. Gulf producers are increasingly relying on alternative routes to keep crude moving as attacks and shipping disruptions expose the risks of depending on Hormuz.
The proposed levy adds a fresh commercial risk on top of existing security fears, raising uncertainty for strait hormuz oil shipments at a moment when Gulf states are already scrambling for backup routes.
How are Saudi Arabia and the UAE bypassing Hormuz?
From Saudi Arabia's East-West pipeline to the United Arab Emirates' export infrastructure outside the strait, Gulf producers are turning to land-based and east-coast routes. The International Energy Agency says Saudi Arabia and the UAE are the only Gulf producers with operational crude pipelines capable of bypassing the Strait of Hormuz, with an estimated 3.5 million to 5.5 million barrels a day of available capacity.
Those routes offer a partial safety valve, not a full substitute. Kuwait, Iraq and Qatar retain heavy exposure to the waterway, while alternative pipelines cannot absorb all the crude and liquefied natural gas that would be stranded in a prolonged closure.
What is DP World planning on the UAE east coast?
The United Arab Emirates is reportedly looking to build a new port and container terminal on its east coast to bypass the Strait of Hormuz and reduce dependence on Jebel Ali, the premier logistics hub in the Middle East. Dubai-based port operator DP World is said to be in talks to develop a multipurpose port in Fujairah and a new terminal at the existing harbour in the emirate, the Financial Times reported Monday, citing people familiar with the matter.
Reuters also reported that discussions on project structure and financing remain unsettled, though the port could be ready within 18 months. Goods would reach the Gulf of Oman before being trucked across the UAE and neighbouring Gulf countries. DP World declined to comment when contacted by CNBC.
Can Gulf pipelines fully replace Hormuz oil shipments?
Not yet. The Gulf is a long way from reducing the Strait of Hormuz to a secondary route. Even with Saudi and Emirati bypass capacity, the region cannot quickly reroute the full volume of crude and LNG that normally moves through the narrow waterway.
For traders tracking supply risk, the shift is structural: bypass infrastructure is moving from contingency planning to core strategy. Follow more market-moving energy and trade updates in our Fintech & Crypto Alerts section.