Analyst Warnings: Why New Pipelines Won't Make the Strait of Hormuz Obsolete

Despite ongoing plans to construct alternative pipelines, analysts argue that dependence on the Strait of Hormuz is unlikely to end. The narrow channel will remain vital for container shipping and natural gas transport.

US Treasury Secretary Scott Bessent claimed on Monday that the strait would become a 'worthless piece of water' within two years, once new pipelines allow Gulf countries to bypass the waterway for global oil transport. He estimated that up to 70 per cent of customary energy flows could shift to these pipelines.

These developments unfold as Gulf nations and Iraq heavily invest in pipeline infrastructure while the Strait of Hormuz stays shut. Prior to the regional conflict, more than 20 per cent of global energy trade passed through the strait.

Salih Yilmaz, a senior energy analyst at Bloomberg Intelligence, stated: 'Oil has meaningful alternatives that can expand relatively quickly, but LNG and container shipping are much harder to replicate, which means the strait is likely to remain strategically important well beyond the next two years.'

Amid attacks by Iran's Islamic Revolutionary Guard Corps, only a small number of vessels cross the strait daily, a sharp drop from over 100 ships a day before the conflict began more than six months ago.

The UAE and Iraq have announced initiatives for new pipelines to bypass the waterway. The UAE is expanding the Habshan–Fujairah pipeline to double its crude export capacity to 3 million barrels per day, with completion expected next year. Meanwhile, Iraq and Syria are working to restore the Kirkuk-to-Baniyas pipeline, and Iraq is building another pipeline linking Basra to Haditha.

Saudi Aramco is also evaluating an expansion of its East-West pipeline as maritime blockades by Yemen's Houthi rebels restrict access through the Red Sea.

While these routes offer regional optionality, Mr Yilmaz noted that they fall short of replacing the roughly 20 million barrels a day of oil and products usually transiting Hormuz. Furthermore, liquefied natural gas (LNG) exports remain heavily exposed, as Qatar’s Ras Laffan facilities sit within the Gulf, and no existing pipeline network can reroute those volumes.

Sasha Foss, an energy markets analyst at Marex, emphasized: 'Geography is destiny and the Strait of Hormuz is too critical an artery to be completely bypassed.' He described Mr Bessent's remarks as a negotiation posture unlikely to alter long-term market realities.

Meanwhile, oil prices remained volatile following renewed fighting between the US and Iran. Hasnain Malik, head of geopolitical risk and emerging markets equity strategy at Tellimer, cautioned that newly expanded infrastructure might prove equally vulnerable to drone and missile attacks.