Gulf’s Gateways to Global Markets

The GCC countries are one of the most influential hubs of global economy and energy markets, supported by an extreme wealth of natural resources, and advanced production and export infrastructure.

GCC holds 32.7% of global oil reserves and 21.2% of global natural gas reserves. According to the data released by the GCC Statistical Centre, GCC countries in 2024 contributed 21.8% of global crude oil production and 26.6% of its exports. Their contribution reached 10% of global marketed natural gas production and 13.5% of its exports.

A large portion of this energy moves across the world through key shipping routes, one of the most important being the Strait of Hormuz. The collapse of shipping in the Strait has prompted the biggest energy and transport disruption in decades. Transits remain at a fraction of the levels amid the US, Israel war on Iran.

Nearly one-fifth of the world’s oil supply, around 20 million barrels per day (mbpd), passes through this strategic chokepoint every day, connecting the Gulf nations with markets in Asia, Europe, and beyond. Crude, condensate and refined fuels exports from eight Middle Eastern countries – Saudi Arabia, Kuwait, Iran, Iraq, Oman, Qatar, Bahrain, and the United Arab Emirates – averaged 9.71 mbpd in March, down 61% from 25.13 mbpd in February.

To bridge the shortage caused due to the closure of the Strait of Hormuz, alternative routes are being explored. Oil flows are continuing from Saudi Arabia's Red Sea port of Yanbu, the UAE's port of Fujairah, Iraq’s Kirkuk port and Oman's ports.

Saudi Arabia's East-West pipeline, which circumvents the Strait of Hormuz, is pumping oil at its full capacity of 7 mbpd. Crude oil exports from Saudi Arabia's Yanbu port now reached 5 mbpd, and the country is also exporting about 700,000 to 900,000 barrels a day of oil products.

Saudi oil giant Aramco operates this 1,200km Petroline, which runs from the Abqaiq oil processing centre close to the Gulf in Saudi Arabia to the Yanbu port on the Red Sea, on the other side of the country.

The UAE’s Abu Dhabi Crude Oil Pipeline or the Habshan-Fujairah pipeline is a 380km pipeline that runs from Habshan, an oil and gas field in the southwestern area of Abu Dhabi to the port of Fujairah on the Gulf of Oman. The pipeline, which became operational in 2012, has a capacity of about 1.5 mbpd.

Iraq’s Kirkuk-Ceyhan crude oil pipeline, provides an alternative route to a pipeline from the Kurdistan region. It links Iraq to the Mediterranean coast of Turkey. The pipeline, which has the capacity of 1.6 mbpd, currently carries about 200,000 bpd.

However, these pipelines can take on only some of the capacity of Hormuz. Governments and energy firms are increasingly prioritizing route diversification as reliance on a single corridor is inherently vulnerable.

The export facilities at Duqm and Sohar in Oman, located along open-ocean trade routes, becomes particularly valuable during periods of geopolitical uncertainty. The Sultanate has direct access to the Arabian Sea and the wider Indian Ocean, thus allowing energy shipments to reach international markets without passing through the Strait of Hormuz.

As is seen in recent month, the impact of disruptions in one region ripple across continents.  In such scenarios, reliable and strategically located logistics corridors will play a key role in global energy trade.

Editor