War in the Middle East – How short will oil become?

A supply shortage looms due to the blockade of the Strait of Hormuz,...

The war with Iran and the resulting blockade of the Strait of Hormuz have presented the oil market with an unprecedented challenge. After all, the Strait of Hormuz is considered one of the most critical maritime chokepoints for global oil transport. With approximately 20 million barrels per day (of which 15 million are crude oil and 5 million are petroleum products), about one-fifth of global oil consumption is normally transported via this route. The blockade threatens an immediate supply shortage, which would have far-reaching consequences for global markets and energy security. We examine the extent to which this gap can be filled.

...via a diversion through pipelines,...

A portion of the crude oil can be transported via existing and expandable pipelines, bypassing the Strait of Hormuz. In particular, the East-West pipeline in Saudi Arabia and alternative routes through the United Arab Emirates offer the capacity to divert 3.5 to 5.5 million barrels per day, according to estimates by the International Energy Agency. This measure is technically challenging and requires rapid coordination between producer and consumer countries. Saudi Arabia is already doing this; according to shipping data, shipments from the Red Sea export terminal are expected to rise to an average of 3.8 million barrels per day in March. This suggests that the capacity limit is not far off, and at least in the short term, the infrastructure cannot be expanded at will.

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