Located between Oman and Iran, the Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the world’s most important oil chokepoint due to its daily oil flow of about 17 million bbl/d in 2011. Flows throught the Strait in 2011 were roughly 35 percent of all seaborne oil, or almost 20 percent of oil traded worldwide. More than 85 percent of these crude oil exports went to Asian markets, with Japan, India, South Korea and China reprensenting the largest destinations. In addition, Qatar exports about 2 trillion cubic feet per year of liquefied natural gas (LNG) through the Strait of Hormuz, accounting for almost 20 percent of global LNG trade.
At its narrowest point, the Strait is 21 miles wide, but the width of the shipping lane in either direction is only two miles, separated by a two-mile buffer zone. The Strait is deep and wide enough to handle the world’s largest crude oil tankers, with about two-thirds of oil shipments carried by tankers in excess of 150,000 deadweight tons.
Most potential options to bypass Hormuz are currently not operational. Only Iraq, Saudi Arabia and the United Arab Emirates (UAE) presently have pipelines able to ship crude oil outside of the Gulf, and only the latter two countries currently have additional pipeline capacity to circumvent Hormuz. At the start of 2012, the total available pipeline capacity from the two countries combined, which is not utilized, was approximately 1 million bbl/d. The amount could potentially increase to 4.3 bbl/d by the end of this year, as both countries have recently completed steps to increase standby pipeline capacity to bypass the Strait.
Iraq has one major crude oil pipeline, the Kirkuk-Ceyhan Pipeline (Iraq-Turkey) that transports oil from the north of Iraq to the Turkish Mediterranean port of Ceyhan. This pipeline pumped about 0.4 million bbl/d in 2011, far below its nameplate capacity of 1.6 million bbl/d and it has been the target of sabotage attacks. Moreover this pipeline cannot send additional volumes to bypass the Strait of Hormuz unless it receives oil from southern Iraq via the Strategic Pipeline, which links northern and southern Iraq. Currently portions of the Strategic Pipeline are closed and renovations to the Strategic Pipeline could take several years to complete.
Saudi Arabia has the 745-mile-long Petroline, also known as the East-West Pipeline, which runs from across Saudi Arabia from its Abqaiq complex to the Red Sea. The Petroline system consists of two pipelines with a total nameplate capacity of about 4.8 bbl/d. The 56-inch pipeline has a nameplate capacity of 3 million bbl/d and its current throughput is about 2 million bbl/d. The 48-inch pipeline had been operating in recent years as a natural gas pipeline, but Saudi Arabia recently converted it back to an oil pipeline. The switch could increase Saudi Arabia’s spare oil pipeline capacity to bypass the Strait of Hormuz from 1 million bbl/d to 2.8 million bbl/d, which is only attainable if the system is able to operate at its full nameplate capacity.
The UAE constructed a 1.5 million bbl/d Abu Dhabi Crude Oil Pipeline that runs from Habshan, a collection point for Abu Dhabi’s onshore oil fields, to the port of Fujairah on the Gulf of Oman, allowing crude oil shipments to circumvent Hormuz. The pipeline was recently opened and the first shipment to 500,000 barrels of oil was sent through the pipeline to the Fujairah oil terminal where it was loaded on a tanker and sent through the pipeline to the Pak-Arab Refinery in Pakistan. The pipeline will be able to export up to 1.5 million bbl/d, or more than half of UAE’s total net oil exports, once it reaches full operational capacity in the near future. However, the UAE does not currently have the ability to utilize this pipeline completely, until it ramps to full capacity. In late May, Fujairah ruler sheikh Hamad bin Mohammed Al-Sharqi noted that this pipeline capacity should rise further to a maximum 1.8 million bbl/d.