When I wrote about the Strait of Hormuz last month, the question was academic: how much longer could Saudi Arabia really tolerate the vulnerability of routing nearly all its oil through a choke point that Iran had shown every intention of closing?
The answer, it turns out, is: not much longer. And the response is reshaping the entire geopolitics of the Gulf.
What’s Changed Since Last Time
In early February 2026, the United States and Israel went to war with Iran. By July, Iran had stopped talking and started acting. On July 7, 2026, Iranian forces struck three commercial vessels transiting the Strait of Hormuz — a message delivered in diesel fuel and twisted steel.
The Strait carries roughly 20 to 21 percent of global oil. A sustained closure would not merely inconvenience markets. It would detonate them.
Saudi Arabia’s answer to this vulnerability has been sitting idle for forty years: the East-West Pipeline, also known as the Petroline. Built in the 1980s, it runs 746 miles from the oil fields at Abqaiq across the Arabian Peninsula to the Red Sea port of Yanbu, completely bypassing the Strait. For decades it ran well below capacity — a backup line, a contingency, a what-if.
That changed this year. According to Aramco CEO Amin Nasser, the pipeline is now running at full rated capacity for the first time: 7 million barrels per day. Of that, roughly 2 million barrels per day supply Saudi Arabia’s own domestic refineries. The remaining 5 million barrels per day head straight to export terminals.
The Petroline is no longer a backup. It is now Saudi Arabia’s primary outlet to global markets.
The Expansion Question
But capacity was never really the point. The point was always whether Saudi Arabia would be forced to make a choice: stay dependent on the Strait, or invest billions in reducing that dependency.
The war answered that question. And now Saudi Arabia is in preliminary talks to expand the Petroline’s capacity by between 1 and 2 million barrels per day.
Reuters broke the story in early July. The expansion would likely involve a second, smaller pipeline running parallel to the existing line — possibly optimised for refined products rather than crude — which would give Saudi Arabia the flexibility to process oil domestically and ship refined products to market without ever touching the Strait of Hormuz. The project would take years and cost billions of dollars. It would also require changes to Saudi Arabia’s crude pricing mechanisms, since less crude would be moving through traditional export terminals.
For Saudi Arabia, it is a worthwhile bet.
What surprised me was who joined the conversation.
The Gulf’s Own Strait Problem
Kuwait, Bahrain, and Qatar have all entered preliminary talks about the expansion. None of them have their own Hormuz bypass. All of them have been watching Iran’s recent aggression with the kind of attention that focuses the mind.
In late June, Kuwait’s Oil Minister Sheikh Nawaf Al-Sabah publicly confirmed that Kuwait was in talks with Saudi Arabia about the expansion at the Atlantic Council’s Global Energy Forum. It was a remarkable statement — not the sort of thing a Gulf oil minister typically announces to a room of energy traders and geopolitical analysts unless the situation had become urgent.
What Kuwait, Bahrain, and Qatar understood was simple: if the Strait closes, they close. The Petroline expansion would give them an alternative route to market. It would cost them money — they would need to finance their stake in the expanded capacity — but it would also give them insurance against the one thing that terrifies a Gulf oil state more than anything else: isolation.
The preliminary nature of these talks is important. Nothing is settled. The maths are not done. The financial commitments have not been made. But the direction of travel is clear: the Gulf states are recognising that the era of Hormuz dependency is ending, not because they chose it, but because Iran has made it unsustainable.
The Israeli Angle — And Why It Matters
Here is where the story takes a turn that most Western energy analysts have missed entirely.
In March 2026, Prime Minister Benjamin Netanyahu made a remarkable pitch: Israel could serve as a Gulf energy transit corridor. The idea was to create a pipeline from Saudi Arabia southward to Eilat, Israel’s Red Sea port, and then connect to the existing Eilat-Ashkelon Pipeline (EAPC), which runs 254 kilometres north to Ashkelon on the Mediterranean. The result would be a route that moves Gulf crude and refined products to Europe without touching the Strait of Hormuz, without transiting the Red Sea’s Houthi-infested waters, and — in Netanyahu’s framing — cementing Israel as an indispensable economic partner for the Gulf states.
It is not a new idea. Versions of this have been proposed for decades. But in the current environment — with the Strait under demonstrated threat, with Saudi Arabia actively planning expansion of its bypass capacity, and with the Abraham Accords framework already in place — it suddenly looks less like fantasy and more like strategy.
Israeli Energy Minister Eli Cohen has been actively pitching the concept to Gulf energy officials. The numbers are manageable: a 700-kilometre pipeline from northern Saudi Arabia to Eilat would be expensive but not unprecedented. The Eilat-Ashkelon line already exists and has spare capacity. The economics work, particularly if you price in the risk premium that shippers now demand for Hormuz transit and Red Sea passage.
For Saudi Arabia, it offers something valuable: a diversified set of export routes, each with its own geography and geopolitics. For Israel, it offers what Netanyahu has been seeking since he returned to office: a role as an essential piece of Gulf regional infrastructure, a live economic dividend from the Abraham Accords that goes beyond tourism and tech partnerships.
For the West, it offers resilience. European refineries would gain access to Gulf crude through a route that does not depend on Iranian tolerance or Houthi restraint.
The Larger Picture
What we are watching is not a crisis response. It is a reordering of Gulf energy infrastructure in real time.
The Petroline expansion is about Saudi Arabia and its smaller Gulf neighbours hedging against Iranian aggression by building infrastructure that makes the Strait of Hormuz less essential. The Israeli transit corridor proposal is about Israel positioning itself as a critical piece of that hedge — turning geography and the Abraham Accords into something that works on a balance sheet.
None of this solves the underlying problem: Iran remains hostile, the Strait remains vulnerable, and the risk of a broader conflict that actually closes the waterway remains genuine. But what it does show is that the Gulf states — and Israel — are no longer waiting to see what Iran will do. They are building infrastructure that assumes Iran will remain a threat and structures their future accordingly.
That is not complacency. That is strategy.
—
David Cohen is an English solicitor and Israeli lawyer practising in cross-border technology transactions. He is also a gigging musician with his band The Core.
Leave a Reply