Oil, war, and bottlenecks: rethinking the Strait of Hormuz | DW News

0:00 It's a design flaw, building a huge part of the world's oil

0:03 and gas infrastructure around a single exit at the straight of Hormuz,

0:07 a mere 33 km wide at its narrowest point.

0:10 Just as a tiny port in the movie Star Wars was

0:13 the only way to take down the massive Death Star spaceship,

0:16 the narrow straight is a critical vulnerability

0:18 for the global oil and gas market.

0:21 The International Energy Agency has been saying for years

0:23 that the world needed to diversify its energy choke points.

0:26 Surprise, surprise, it didn't.

0:29 But what if you could redesign it?

0:31 Will the lessons learned from the Iran

0:32 war encourage producers to diversify away from Hormuz,

0:36 build alternative transport routes,

0:39 reroute oil routes through Asia or other countries?

0:42 Will it rekindle the debate about renewables and nuclear energy?

0:46 What does the post Hormuz Gulf export architecture look like?

0:50 Let's take a look.

0:56 Hormuz has been a risk for about as long as it's been a trading channel.

0:59 Tensions go back centuries.

1:02 After Iran nationalized its oil industry,

1:04 Britain's Royal Navy established a blockade in 1951 to prevent

1:08 Iranian oil from leaving the Persian Gulf through the strait.

1:11 The tanker war during the 1980s saw a sustained attack

1:14 on shipping with Iran laying naval mines and harassing neutral tankers.

1:19 A series of mine attacks on tankers in May

1:21 and June 2019 was blamed on Iran by the US Navy.

1:25 That same year, Houthi claimed drone

1:26 and missile attacks targeted Saudi facilities.

1:29 In 2023, the Houthis launched a sustained campaign against commercial

1:33 shipping in the Red Sea and the Gulf of Aiden.

1:36 I think of the 2019 uptake attack, the Houthi escalations.

1:41 These were serious disruptions, but they didn't reach the threshold that would

1:46 justify the scale of investment that alternative infrastructure requires.

1:51 This deterrent architecture surrounding hormuse made full closure

1:56 seem too costly for any actor to contemplate seriously.

2:04 In the short term, don't expect anything too dramatic.

2:07 The most likely scenario is producers will expand existing supply lines and make

2:11 sure they include a plan B or a plan C as backup.

2:15 The starting point has to be a cleareyed

2:19 acknowledgement of what the goal actually is.

2:22 Um it's not to replace horror movies altogether.

2:25 The volumes are simply too large.

2:26 The geography is too complex and the producer base is

2:30 too dispersed for any single alternative to substitute for it fully.

2:34 The goal is rather to build enough redundancy

2:38 that no single choke point can produce a total loss.

2:42 That means a network of corridors rather than a single pipeline.

2:46 Let's walk through what's already on the map.

2:48 There are three main routes that are being

2:49 used to transport oil from the Gulf countries.

2:52 Since early April, Saudi Arabia has substantially

2:54 increased flows through its East West pipeline.

2:57 They're claiming exports of 7 million barrels a day.

3:00 The International Energy Agency oil report says

3:02 that Red Sea exports almost doubled month on month.

3:05 The UAE's Abu Dhabi crude oil pipeline also bypasses the straight of Hormuz.

3:10 It stretches around 400 km from onshore oil facilities at Habshan to Fujara.

3:14 The pipeline is estimated to handle between 1.5

3:17 million and 1.8 million of barrels a day.

3:19 And the Siruk Seahan pipeline, which runs from Iraq to Turkey,

3:23 can transport 300,000 barrels of oil every day.

3:26 Since the war broke out in February 2026,

3:28 Middle East oil exports have dropped by at least 60%.

3:32 New pipelines take years to build and cost an enormous amount of money.

3:36 And if you believe, as we do,

3:38 that fossil fuel demand is going to stabilize over the next decade or so.

3:43 It is a difficult investment case to make.

3:46 Now, we think expanding capacity on existing pipelines is

3:52 um a much easier sell than building new ones.

3:54 In a lot of cases, you could also see some structural change on storage

3:59 capacity as a cheaper alternative to keep

4:02 oil production going if new disruptions arise.

4:06 So if the lesson of this crisis is we need to build

4:09 more resilience which I'm sure it is now expanding existing pipeline capacity

4:15 finding alternative routes like the for example the green corridor between Dubai

4:19 and Oman and investing in storage is where I think money could flow.

4:24 Now permanent rerouting through entirely new pipelines,

4:28 the costbenefit analysis there is probably harder to justify.

4:36 Over the longer term, say 10 to 20 years,

4:38 the focus shifts to a more resilient network.

4:41 A network of corridors for oil to pass through, something bigger.

4:44 Multiple routes, multiple exits across different sea basins,

4:48 all connected by stable crossber frameworks,

4:50 a web of corridors for energy security.

4:53 This is harder to build and harder to fund,

4:55 but it's the only model that delivers

4:57 genuine resilience and not just temporary fixes.

5:00 The problem with these pipelines, of which we will see many more in the future,

5:04 is that they are not safe either because a they go overland and are

5:08 easily attacked and the East West pipeline which we currently use in Saudi

5:12 Arabia is in range of huge missiles and b uh this pipeline goes

5:17 to the Red Sea which itself has another bottleneck at the end of it.

5:21 So in some there is no 100% safety

5:25 but the only safety which we have in this region

5:28 would be by increasing the diversity of export

5:31 rules and I'm certain that this will happen.

5:36 The former British Prime Minister Winston Churchill famously held

5:39 that the key to energy security was diversity in sources of supply.

5:43 Safety and certainty and oil lie in variety and variety alone.

5:47 He told the UK Parliament in 1913.

5:50 Not much has changed.

5:51 Fossil fuels offer easy transport and storage.

5:54 But there are risks of supply distribution as we are seeing right now in Hormuz.

5:57 Renewable energy while clean is hard to store and move.

6:00 If we can't transport it or store it,

6:02 the lights go out when the sun isn't shining or the wind isn't blowing.

6:06 On a bigger scale, it's time that we spend

6:08 step back and draw the lessons from these wars,

6:11 from these disruptions to global energy and say

6:14 the result should not be more economic warfare.

6:17 Then the result needs to be a sound mix using

6:20 all of the above and not relying only on one.

6:26 China is the world's largest importer by the straight of Hormuz,

6:29 historically relying on it for nearly half of its crude.

6:32 The Iran crisis has accelerated a strategic pivot that was already underway.

6:37 Beijing's long-standing energy security fears have

6:39 been transformed into an immediate operational reality.

6:43 China moving to increase the share of oil transported through

6:46 overland pipelines by 45% by 2030 um is alone an indicator

6:53 of that right expanding corridors in multiple strategic directions

6:56 and and and and again um I think of the geoeconomic implications

7:01 of this model um and and what that looks like

7:04 for the broader Middle East the strategic and commercial oil stockpile is

7:08 estimated between I think 1.2 to 1.4 four billion barrels is

7:14 um over a 100 days of net import cover for China.

7:18 Um just again reinforces the case

7:21 for this alternative uh routes and network diversification.

7:30 Europe is facing a crisis regarding LNG supply.

7:33 Every European energy crisis since 2021 has produced the same prescription.

7:37 more renewables, more nuclear, reduce fossil fuel dependency.

7:41 European countries are often criticized for not implementing structural reforms.

7:45 Is this a fair assessment?

7:46 I would actually push back um a little bit on that premise

7:50 because Europe has done more than it's been given credit for.

7:55 Gas demand is around is down around 20% since 2022.

8:00 And actually 2025 was the first year renewables generated more

8:05 fossil fuel more energy than fossil fuels in the EU.

8:10 So I think that reduced gas dependency is part of the reason

8:14 electricity prices haven't spiked nearly as sharply this time around.

8:20 Um you can see it in the numbers.

8:21 TTF gas is up around 33% on pre-conlict pre-conlict

8:27 levels while in 2022 um it was around 400%.

8:34 Um oil is a bit of a harder story because it remains the dominant fuel

8:40 for transport and very few European countries

8:43 can insulate themselves from a serious oil shock.

8:47 Um the electrification of transport is underway

8:50 and the dependency should fall over time.

8:53 Future energy supply involves diversification both for producers and consumers.

8:57 This can include geographical diversification looking to other oil

9:01 producing areas like the North Sea, the US and Africa.

9:04 Also better energy mix with oil, gas, nuclear and renewables.

9:08 And then broadening the infrastructure,

9:10 adding a variety of pipelines, LNG terminals and electricity interconnections.

9:15 Diversification does mean higher short-term costs,

9:18 the need for investment in infrastructure,

9:19 and dealing with possible inefficiencies compared

9:22 to relying on the cheapest source, but these are weighed against the benefit

9:25 of being better prepared to resist shocks.

9:28 So the lesson isn't just diversify away from Russia,

9:32 which we thought it was after 2022, but is that this depending heavily on any

9:37 single supply route carries a big risk.

9:40 So all this um these alternatives uh through central Asia, Eurasia,

9:48 this is the probably the the conversation

9:50 reform conversation that will likely happen

9:53 to diversify from a single uh transport

9:56 route um that gets these kind of problems.

10:03 If the straight of Hormuz does not reopen soon,

10:05 then the world will almost certainly face a major oil supply crisis,

10:09 forcing painful sustained reductions in demand.

10:13 What's the damage if Hormuz remains shut for a longer period?

10:17 A prolonged closure wouldn't just be a price spike that disappears quickly, uh,

10:22 but it would mean stickier inflation, weaker investment,

10:26 and central banks having to hold rates or even increase them.

10:30 um uh long for longer than what they'd like, right?

10:34 Or or even increase them.

10:35 And that's the channel through which we think this conflict becomes um

10:42 a global economic problem more than a regional and contained uh problem.

10:52 Ultimately, a redesign to avert another crisis

10:54 in the straight of Hormuz doesn't seem like an option.

10:56 The Gulf's post-conlict energy system would likely look

11:00 much like it does today simply because there

11:02 are no viable alternatives to the straight

11:04 or existing pipelines in the short to medium term.

11:07 Instead, the focus will shift towards strengthening current infrastructure

11:10 and diversifying supply routes for both producers and consumers.

11:14 The real question is whether that will be

11:16 enough to prevent the next global economic shock.