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Saudi Pipeline Capacity Reduces Hormuz Risk, Shifts It to Red Sea
Tassnief says Saudi Arabia's East-West pipeline near 7 million bpd capacity can bypass Hormuz, but the reroute shifts risk to the Bab al-Mandeb chokepoint.
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A new report from Simah Rating Agency (Tassnief) argues that Saudi Arabia and the UAE can withstand a Strait of Hormuz closure better than most Gulf peers. The resilience comes from export flexibility, large sovereign wealth funds, and economic diversification. The naive interpretation is that Saudi Arabia simply reroutes crude through its East-West pipeline and avoids the problem. The better read is that the workaround transfers risk to the Bab al-Mandeb chokepoint, a narrow passage with its own geopolitical exposure.
The Pipeline Capacity That Changes the Hormuz Calculus
Tassnief highlights the East-West pipeline, which moves crude across the kingdom to the Red Sea. That pipeline operates near its 7 million barrels per day capacity. Combined with 5 million bpd of throughput capacity at Yanbu, Saudi Arabia can redirect almost all its Gulf production away from the strait. The kingdom also maintains strong fiscal buffers via its Sovereign Wealth Fund, with over $1 trillion in assets. The UAE holds $1.8 trillion in its fund. Those reserves provide substantial capacity to absorb shocks, support fiscal budgets, and manage war-related costs without immediate balance sheet pressure.
That capacity does not eliminate risk. The East-West pipeline runs near full utilization today. Any mechanical failure or maintenance downtime would compress the safety margin. The rerouted volumes must then transit the Bab al-Mandeb strait between Yemen and Djibouti. Tassnief explicitly warns that shifting supplies toward the Red Sea “increases exposure despite avoiding upstream production shut-ins.” The risk is transferred, not removed.