How a 45-year-old Saudi oil pipeline helps solve the problem of the Strait of Hormuz

However, the final export capacity in the west of the country is significantly smaller than the export volumes on normal days. The project, which began as an initiative for the economic development of the West Coast, has expanded over the past 40 years and has become a strategic route that bypasses the strait and somewhat facilitates the global energy market and the kingdom’s economy.

Saddam Hussein and Khomeini: A History of a Pipeline

“We planned the pipeline in 1978, even before Saddam Hussein in Iraq and Khomeini in Iran,” says Dr. Nahum Shila, an expert on Saudi Arabia and the Gulf states at the Moshe Dayan Center at Tel Aviv University and CEO of Global Osint. “Originally, the pipeline was a project of general development of the oil economy – an infrastructure expansion intended mainly to develop the western coast of Saudi Arabia, which was neglected.” According to him, the move is intended to serve as “regional cooperation between the Gulf countries and industrial development of Saudi Arabia by establishing oil refineries in the West, more than a geopolitical defense”.

Originally, the pipeline had a limited capacity of less than 2 million barrels per day, compared to about 7 million barrels today. However, over the past 40 years the picture has changed significantly following a series of expansion projects, which are apparently related to geopolitical changes: Saddam Hussein’s rise to power in Iraq and the Islamic revolution in Iran in 1979. Although the pipeline was already completed in 1981, subsequent events – the Iran-Iraq war in the 1980s (which was accompanied by mutual attacks on oil tankers in the Gulf) and the Iraqi invasion of Kuwait in 1991 – illustrated to the world the importance of the region and its strategic vulnerability for the international economy.

According to Prof. Yehoshua Krasna, a former senior official in the intelligence system and currently the director of the Forum for Regional Cooperation at the Dayan Center at Tel Aviv University: “The pipeline was built for two reasons: one is geopolitical – creating an outlet for oil outside the Persian Gulf; and the other is internal – the development of the west coast of the Red Sea, where electricity, desalination and refining facilities for self-consumption were built.” Krasna points out that there are no oil reserves in western Saudi Arabia, and in the past they had to burn crude oil to produce electricity: “Today the kingdom is switching more to gas and solar energy, but the need for a regular supply to the West was part of the original thought behind the construction of the pipeline.”

The land pipeline – will save the market?

In retrospect, the strategic decision paid off, but the pipeline is far from being a complete replacement for Hormuz. According to the engineering magazine ENR, while normally about 20 million barrels pass through the strait per day (of which about 10 million are from Saudi Arabia), the pipeline is only able to transport about 7 million barrels in an optimal scenario. But the real bottleneck is in the export ports in the Red Sea, which are capable of handling up to 4.5 million barrels per day. Thus, the “Vortexa” consulting agency estimates that realistically, during a war, exports will amount to only about 3 million barrels per day – a fraction of the total Gulf exports, whose crossing of the $100 per barrel threshold already indicates the upheaval that has gone through.

Prof. Krasna warns that the situation is even more complex: “The pipeline is not entirely intended for export. About 2.5 million barrels per day are already used for Saudi Arabia’s domestic needs in the West, so the ability to increase sales abroad is limited. In addition, the infrastructure is adapted to relatively ‘light’ oil, and not to the ‘heavy’ oil that is produced mainly in the east of the kingdom.”

Dr. Shila mentions that even at the point of exit to the Red Sea, the oil faces a crossroads: while the route to Europe passes through Suez, exports to the main customers in Asia require turning south – towards the Bab al-Mandab strait controlled by the Houthis. “At the moment, ships are passing through there, but the situation could change at any moment,” says Shila. “This is probably part of the explanation for the Saudi passivity in the face of the Iranian attacks.”

Weapons in the billions, deterrence at zero

During the last two weeks, Iran has repeatedly attacked the Gulf countries, with an emphasis on Saudi Arabia and the United Arab Emirates, but they have refrained from responding for the time being. Dr. Sheila does not mince words in describing the situation: “Saudi Arabia is behaving like a ‘baked boy.’ They had severe humiliations in Yemen, and in the last 100 years they have not won a single war.”

According to him, there is a huge gap between the military investment and the Saudi army’s performance on the ground: “There is a huge dissonance between the quantity and quality of the weapons they buy and the actual capacity of the army, because in the end the weapons are operated by people. The Saudi army is a low-quality army, and the appointments in it are on a tribal-clan basis. The Crown Prince of Saudi Arabia, Mohammed bin Salman, is trying to change this, but it is difficult to change the DNA of a country in a few years.”

Dr. Shila points out that Riyadh was hoping that external factors would do the job for it: “It recently signed a defense alliance with Pakistan, but it is too busy with the conflict with Afghanistan and the conflict with India.” In his estimation, Saudi Arabia fears that a reaction on its part will lead to an even more severe Iranian attack, or to the activation of the Houthi rebels in Yemen to block the little oil exports that it still has left

The United Arab Emirates is also currently adopting a similar strategy. Although its leader, Mohammed bin Zayed, stated that “we are not easy prey, our skin is thick and our flesh is bitter”, but in practice the country avoids kinetic measures against Iran; The harshest step taken so far was the expulsion of Iranian students from the country.

In Arabic they say: “There is no tax on talk”

As for the continuation, Dr. Sheila maintains caution: “The opinion is that beyond a certain attack threshold, Saudi Arabia will have no choice, but it may remain passive in order not to exacerbate the situation. Saudi Arabia always fears a stronger blow. In Arabic they say: ‘There is no tax on talk.'”

In the territory of the United Arab Emirates there is another oil pipeline leading to the port of Fujairah – the only port of the country located outside the blocked Straits of Hormuz. However, precisely because of its strategic location, Iran attacked the oil terminals in Fujairah several times recently and practically paralyzed most of the exports through it. And so, this reality leaves the Saudi pipeline as almost the only alternative in the regional space.