The world without Hormuz: Oil flows collapse as alternatives fall short
Exports plunge by nearly half as improvised routes fail to replace the global energy system’s most critical chokepoint.
If the global energy crisis now unfolding could be distilled into a single figure, it would be the staggering gap between the roughly 20 million barrels per day that typically flow through the Middle East and the volume currently being moved through improvised alternative routes, barely 40% of normal levels.
In ordinary times, the Strait of Hormuz is far more than a shipping lane; it is a central artery of the global economy. Roughly one-fifth of the world’s oil consumption and a quarter of all seaborne energy trade pass through it. It is the most critical chokepoint in the global energy system. When it is disrupted, the consequences extend far beyond higher prices, they reshape the global economic order.
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Saudi Arabia's Abdulaziz bin Salman Al Saud alongside a CMA CGM tanker.
(Photos: Marine Traffic, Bloomberg)
Now, more than a month into a military campaign that has upended regional stability, the key question is not whether alternatives exist, but whether they can meaningfully replace Hormuz. The answer emerging from the data is stark: they cannot.
Amid the disruption, Gulf states have demonstrated remarkable adaptability. Saudi Arabia has diverted exports to Red Sea terminals, the United Arab Emirates has relied on the port of Fujairah outside the Strait, and Iraq has revived complex overland routes through Turkey and Syria.
On paper, Saudi Arabia and the UAE together have alternative pipeline capacity of between 2.6 and 5.5 million barrels per day. In practice, even under optimal conditions, this represents only a partial substitute. It may slow the economic damage, but it cannot restore the massive volumes that typically pass through Hormuz.
The scale of the disruption becomes clear when examining actual export data. According to Arab economic reports, seaborne crude exports from Gulf states (excluding Iran) fell to just 8.44 million barrels per day in March, a 49% collapse from February’s 16.58 million barrels.
The breakdown underscores the severity of the shock. Saudi Arabia’s exports dropped to 4.39 million barrels per day, the UAE to 2.13 million, and Iraq, arguably the hardest hit, to just 561,000 barrels. Kuwait and Qatar have nearly vanished from the export map, with just 280,000 and 135,000 barrels per day respectively. Oman stands as the lone exception, increasing exports to 940,000 barrels thanks to its location outside the Strait.
Even after weeks of full-scale logistical mobilization, the region is managing to export only about half its normal volume. The conclusion is unavoidable: the emerging network of bypass routes is not a strategic replacement, but a temporary and costly stopgap.
The situation in Iraq illustrates the strain. Baghdad has resorted to exporting fuel oil through Syria, while its state marketer has signed contracts to transport fuel by truck across deserts. When a major oil producer turns to road transport, it signals not resilience but desperation, reliance on fragile logistics, political coordination, and security conditions across vast distances.
Global shipping companies have also adapted. Firms such as CMA CGM and Maersk have rapidly established “land bridge” corridors, unloading cargo at Red Sea or Arabian Sea ports and transporting it overland to Gulf destinations. These solutions demonstrate operational flexibility, but also their limitations. While viable for goods such as food or medicine, they are wholly inadequate for the continuous movement of massive volumes of oil and liquefied natural gas.
This improvisation comes at a steep cost. Every barrel that bypasses Hormuz carries a significant premium. While costs vary by route, the broader trend is clear: energy logistics have become far more expensive. S&P has already raised its 2026 oil price forecasts by around $15 per barrel, reflecting expectations of prolonged disruption. Shipping insurance premiums have doubled or tripled, adding roughly $1 million per voyage for a $100 million vessel.
There are also structural constraints. Hormuz enables the efficient transport of crude oil, refined products, LPG, and LNG through a single corridor. Alternative pipelines, primarily designed for crude, cannot replicate this complexity, particularly for Qatari natural gas exports, which remain critical for global markets.
To stabilize markets, the International Energy Agency has coordinated the release of 400 million barrels from strategic reserves, the largest such intervention in its history. But this is, by design, a temporary measure. At current deficit levels, such reserves can only bridge the gap for a limited period.
The broader lesson is one of energy geopolitics. Gulf states have demonstrated extraordinary ingenuity, creating land corridors, expanding pipeline usage, and reviving dormant routes. Yet this very effort highlights a fundamental reality: Hormuz is irreplaceable.
When it functions normally, it delivers unmatched efficiency and scale. When it is disrupted, the world can only compensate partially, and at significant cost. The system now operating in its place is defined by three characteristics: reduced volume, higher expense, and persistent vulnerability.
The current export level of 8.44 million barrels per day is not just a data point. It is a warning: the global energy system remains far from stability.
