Baker Institute paper calls for alternative to Hormuz oil route

Baker Institute

Improvements to the pipelines crossing the Arabian Peninsula would allow more of the oil produced in the Persian Gulf to avoid the Strait of Hormuz, according to a new paper from Rice University’s Baker Institute for Public Policy.

"Creating a pipeline system that permits a substantial fraction of the Middle Eastern oil to be shipped to markets from Red Sea ports weakens the political influence of Iran by reducing the amount of oil that transits the Strait of Hormuz," wrote Dagobert Brito, Rice’s Peterkin Professor of Political Economy and a Rice Scholar at the Baker Institute.

The latest tensions in the Middle East have policymakers looking for alternative ways to get petroleum from its source to world markets, said Brito, author of a paper titled "Revisiting Alternatives to the Strait of Hormuz."

He cited increased threats to international shipping as Iranian military and Revolutionary Guards have invested in submarines, missile boats and mining capability. Because an estimated 20 percent of the world's oil passes through the Strait of Hormuz, the narrow sea-lane between Iran and Oman, ensuring the safety of that oil is "crucial to the world's economy," Brito said.

He focused on a combination of geography and technology to resolve the dilemma. Two pipelines already transport Persian Gulf oil across Saudi Arabia to ports on the Red Sea, thus obviating the need to transit the Strait of Hormuz in tankers. But neither pipeline currently has the capacity to carry the volume required, so Brito suggested using drag reduction agents, "chemicals that are injected into pipelines to reduce the friction and to increase throughput in pipelines."

Citing an earlier study he worked on with the Center for Naval Analysis, Brito found "that with a relatively low amount of investment, it would be possible to ship as much as 11 million barrels per day of Middle East oil production through the Red Sea."

The growing regional rivalry between Saudi Arabia and Iran, Brito suggested, may make the Saudis "more receptive to proposals to augment trans-Arabian pipelines."

In the end, any decision comes down to economics, Brito wrote. "The question that must be addressed is whether the probability that passage through the Strait of Hormuz will be disrupted and the resulting damage to the world economy is high enough to warrant the investment necessary to bypass it."

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