Saudi Arabia has offered alternative to Strait of Hormuz - but there's a problem

The current closure of the Strait of Hormuz - a narrow, critical chokepoint between Iran and the Arabian Peninsula - has triggered a global energy supply crisis. With Iran effectively blocking the route following US-Israeli strikes, Saudi Arabia has attempted to pivot its massive oil exports through an alternative: the Red Sea port of Yanbu. However, as the region grapples with the fallout, it is becoming clear that "Plan B" is insufficient to replace the sheer volume of the "front door."

The strategic importance of the Strait

The Strait of Hormuz is the world’s most important oil transit chokepoint. In February, before the escalation, Saudi Arabia was exporting approximately 7.2 million barrels of crude oil per day, the vast majority of which moved through the Gulf terminals of Ras Tanura and Juaymah. These facilities have direct, high-capacity access to the massive tankers that service Asian markets.

The Yanbu alternative: A bottlenecked solution

To bypass the blocked strait, Saudi Arabia has turned to its "back door": the 1,200-kilometre East-West Pipeline that transports crude across the Arabian Peninsula to the Red Sea port of Yanbu. While this infrastructure provides an essential lifeline, it suffers from two major systemic constraints:

Capacity Limits: While the pipeline has a theoretical capacity of 5 million barrels per day, the actual processing and loading capacity at the Yanbu port is significantly lower. This creates an immediate arithmetic problem: even if fully utilised, the Red Sea route cannot handle the 7.2 million barrels per day that typically flowed through the Persian Gulf.

Logistical Inefficiency: Geography dictates that tankers leaving Yanbu must take a much longer route to reach Asian markets compared to those departing from the Gulf. This increases both shipping duration and operational costs, further straining a global supply chain already reeling from shortages.

Global impacts and political manoeuvring

The consequences of this logistical shift are already manifesting in the market. China’s Sinopec has reported a 10 per cent reduction in refining activity, and Japan has begun tapping into its national strategic reserves to hedge against uncertainty. Even European refiners are facing reduced volumes, demonstrating that the reach of the blockade extends far beyond the immediate region.

Amidst this, the US position remains volatile. President Trump’s recent rhetoric has oscillated between demanding that regional allies take responsibility for patrolling their own waters and questioning whether the US should maintain a military presence in the Gulf at all. By stating, "we don't need it," and emphasising US energy independence, the administration is signalling a potential shift in long-term Middle East security policy, leaving regional actors in a state of high geopolitical anxiety.

Ultimately, Yanbu serves as a vital emergency valve, but it is not a replacement. As long as the Strait of Hormuz remains contested, the global economy faces a sustained "supply squeeze" that no single pipeline can resolve.