The 2026 U.S.-Iran War and the Global Energy Crisis

Chapter 14: Pipelines Cannot Replace the Sea

March 11, 2026, Yanbu Port, Saudi Arabia. Above the Red Sea horizon, the black hulls of Very Large Crude Carriers (VLCCs) lined up in rows. Not just one or two. Satellite data from Vortexa, a shipping analytics company, showed more than twenty VLCCs anchored near Yanbu. During 2025, an average of 760,000 barrels of crude oil per day were loaded at Yanbu. In the third week of March, that number exceeded 4.1 million barrels per day. More than five times the volume. This was what was happening at this port located at the western tip of the Arabian Peninsula, where the global oil market clung to survival after the blockade of the Strait of Hormuz.

When Hormuz closed, the world searched for Plan B. And all eyes turned to the steel pipelines crossing the Middle Eastern desert. Saudi Arabia, the United Arab Emirates (UAE), Iraq. There was an expectation circulating through Wall Street trading desks that the bypass pipelines these three countries possessed could fill the void left by the sea. Pipeline nominal capacities were added up, graphs were drawn, scenarios were created. But there was a deep chasm between arithmetic and reality. Pipelines could serve as relief valves, but they could not replace the sea.

14.1 Saudi East-West Pipeline

In 1981, when the Iran-Iraq War was burning ships in the Persian Gulf, Saudi Arabia made a decision. It would change its export structure, which was held hostage by the Strait of Hormuz. A pipeline departing from the Abqaiq oil processing facility on the eastern coast, crossing 1,200 kilometers through the Arabian Peninsula, and reaching Yanbu port on the Red Sea coast. Its name was the East-West Pipeline, with the nickname Petroline. Two steel conduits,one with a 56-inch diameter main pipe and one with a 48-inch diameter auxiliary pipe,pierced beneath the desert.

The moment had finally arrived for Plan B, after 45 years of waiting, to work.

On March 10, 2026, Saudi Aramco's CEO Amin Nasser said on a fourth-quarter earnings conference call: 'The full capacity operation of the East-West Pipeline will occur within days.' The next day, March 11, the 48-inch line that had been transporting natural gas liquids (NGL) was converted to crude oil transportation. The entire pipeline reached a capacity of 7 million barrels per day. In normal times, approximately 2 million barrels of crude oil per day flowed through this pipe. The output was more than tripled.

CEO Nasser continued his explanation on the same call. Of the 7 million barrels, approximately 2 million barrels had to go to two refineries on Saudi's western coast. At Yanbu, SAMREF, a joint refinery of Saudi Aramco and ExxonMobil, processes 400,000 barrels per day, and YASREF, a joint refinery of Aramco and China's Sinopec, processes 430,000 barrels per day. Subtracting domestic refining volume, the amount available for export was approximately 5 million barrels per day.

But 5 million barrels arriving at the pipeline's end does not mean 5 million barrels going out to sea. Here a second bottleneck appeared. It was the loading capacity of Yanbu port.

Yanbu Port is the largest port on the Red Sea, with 34 berths and 10 terminals. It has a nominal capacity to handle 210 million tons of cargo annually. However, there were only two terminals available for crude oil loading: Yanbu North and Yanbu South. The combined loading capacity of these two terminals was approximately 4.5 million barrels per day. Energy consulting firm Vortexa estimated the effective loading capacity in wartime conditions to be approximately 3 to 4 million barrels per day. European Business Magazine summed up this gap like this: 'The pipeline can deliver. The port cannot dispatch. The gap between them is not an engineering defect but the physics of berths, storage tanks, and tanker schedules.'

The actual numbers proved this. In the third week of March, 4.1 million barrels of crude oil were loaded at Yanbu per day. The following week it remained at similar levels. There were days when it reached 4.6 million barrels, but that was a temporary peak. Even as the pipeline pushed 7 million barrels, the actual amount passing through the port remained trapped between 4 and 4.6 million barrels per day. There was a gap of more than 2 million barrels per day between the pipeline's capacity and the port's processing capacity, and that gap could not be bridged by engineering. Increasing berths takes years. The war had already begun.

And there was a third problem. Tankers loaded with oil at Yanbu had to pass through the Bab el-Mandeb Strait at the southern end of the Red Sea to reach Asia. This strait, which means 'Gate of Tears' in Arabic, is located between Yemen and the Horn of Africa. 26 kilometers wide. And the Yemeni coast here was controlled by the Houthis, an armed group supported by Iran.

From late 2023 through early 2025, Houthi rebels attacked merchant vessels passing through the Red Sea with anti-ship missiles and drones in protest of Israel's Gaza war. It was only a year ago that approximately 90% of the world's container ships were diverting around the Red Sea to the Cape of Good Hope. Now the Houthis were declaring solidarity with Iran and beginning to move again.

On March 27, Reuters reported statements from a senior Houthi leader: 'We are militarily fully prepared for all options. When the appropriate time is will be decided by our leadership.' On the same day, the UK Maritime Trade Operations Center (UKMTO) raised the threat level in the Red Sea and Bab el-Mandeb region to 'substantial.'

Saudi Arabia avoided Hormuz's front door by diverting crude oil through pipelines. But waiting at the pipeline's end was another strait, another threat. Having locked Iran's front door, Iran was standing before the back door through its proxy.

Richard Bronze, co-founder of Energy Aspects, told CNN: 'If Houthis begin threatening vessels, the voyage time to Asia alone will add several weeks at minimum. That will deepen the crude oil shortage in Asia.'

On March 28, the last weekend of the month, Houthi rebels fired two ballistic missiles toward southern Israel. It was the Houthis' first major attack since the Iran war began on February 28. The day before, Mohammed Mansour, Deputy Information Minister of the Houthi government, told CNN: 'Closing the Bab el-Mandeb Strait is a feasible option, and the consequences will be borne by American and Israeli invaders.'

Plan B, after 45 years of waiting, was working. The pipeline pushed 7 million barrels, and Yanbu port recorded its highest loading volume on record. But that success was incomplete. The physical bottleneck at the port consumed the pipeline's capacity, and the military threat at the southern end of the Red Sea undermined the safety of the bypass route. Saudi Arabia had not removed the danger from Hormuz; it had merely changed the address of that danger.

14.2 UAE Abu Dhabi Pipeline

The United Arab Emirates moved 30 years later than Saudi Arabia, but with the same calculation. If the Strait of Hormuz is blocked, exports cease entirely. An alternative is needed.

Design began in 2006, and construction started in 2008. Construction was undertaken by China Petroleum Engineering Construction Corporation (CPECC). The cost ballooned from the initial estimate of 3.3 billion dollars to 4.2 billion dollars (approximately 5.7 trillion won), an overrun of more than 1 billion dollars. In June 2012, a 48-inch pipeline connecting the Habshan oil field in the interior of Abu Dhabi to Fujairah port on the Gulf of Oman coast across 380 kilometers began operations. Its name was the Abu Dhabi Crude Oil Pipeline (ADCOP). It was a route that completely bypassed the Strait of Hormuz.

The nominal capacity was 1.5 million barrels per day. Under optimal conditions, it could reach a maximum of 1.8 million barrels per day. In normal times, approximately 1.1 million barrels per day of Abu Dhabi crude oil flowed through this pipe to Fujairah. It represented about 60% of UAE's crude oil exports. The remaining 40% still went through Hormuz. From the beginning, this pipeline was designed as a partial bypass for times of crisis, not as a complete replacement for the strait.

When the crisis hit, the Abu Dhabi National Oil Company (ADNOC) increased its operating rate. Naveen Das, senior oil analyst at trade information firm Kpler, told CNBC: 'The ADCOP pipeline is currently operating at a 71% utilization rate, with approximately 440,000 barrels of spare capacity remaining per day. ADNOC can temporarily raise it to 1.8 million barrels per day if necessary.' Crude oil exports through Fujairah averaged 1.62 million barrels per day for the month of March. This was a 38% increase from 1.17 million barrels in February.

But what was waiting at the end of the pipeline was once again a threat. Unlike Saudi's case, it was not a threat at sea, but a threat falling from the sky.

On March 3, a fire broke out at the Fujairah Oil Industry Zone. It was debris from a drone intercepted by the UAE air defense system falling onto a storage tank. A storage tank with a capacity of approximately 3 million barrels operated by JSW Infrastructure was damaged. Major storage facility operators including Vopak, VTTI, MENA, and GPS suspended operations citing safety. Bunkering operations continued only with remaining inventory on barges.

On March 6, Maersk, the world's largest shipping company, announced it was suspending all operations at Fujairah port until further notice.

And on March 14, Saturday. A drone came again. This time it struck the Fujairah Oil Industry Zone directly. In a photograph taken by an AFP journalist, black smoke billowed clearly from the facility. The Fujairah Media Office announced: 'Civil defense teams immediately responded to carry out firefighting.' Crude oil and fuel loading operations were suspended entirely. Bloomberg reported in the evening that, like Yanbu, there was not a single tanker at Fujairah's crude loading point according to tracking data.

On Monday, March 16, a third drone strike was reported. This time it was near a petrochemical facility. On the same day, a projectile also struck a tanker anchored 23 nautical miles (approximately 43 kilometers) southeast of Fujairah. The vessel sustained minor structural damage.

Why did Iran strike Fujairah, which is outside Hormuz? The reason was clear. A clue comes from what Iran's Foreign Minister Abbas Araghchi revealed to the state IRNA news agency on March 15: 'The weapons the United States used to attack Kharg Island were launched from the UAE. From a place very close to Dubai.' On March 13, the U.S. struck over 90 military facilities at Kharg Island, Iran's largest crude oil export terminal. Iran's claim was that the staging base for that attack was the UAE.

The Islamic Revolutionary Guard Corps (IRGC) went a step further. Through Iranian state media, they issued a warning: 'U.S. forces are stationed at UAE's Fujairah, Jebel Ali, and Khalifa ports, and the surrounding residents and workers at these facilities must evacuate immediately.' It was a declaration that the ports were legitimate military targets.

Pipelines can bypass maritime bottlenecks. But they cannot bypass the range of missiles and drones. Fujairah was only 250 kilometers from the Iranian mainland. Iran's long-range kamikaze drones and ballistic missiles easily reach that distance. A sentence compiled by Engineering News-Record captures the situation: 'Bypass infrastructure was designed for brief disruptions. This is not that kind of situation now.'

ADNOC's Ruwais refinery also suffered a strike. On March 10, this facility, one of the world's largest refineries, shut down operations due to a fire caused by drone impact. While Ruwais is located on the Persian Gulf coast and is separate from the bypass route of the ADCOP pipeline, a reduction in the UAE's overall refining capacity meant that even if crude oil could be exported, refined products could not be produced.

Arne Lohmann Rasmussen, senior analyst at Global Risk Management, an energy consulting firm, told Middle East Eye: 'This is not a crude oil crisis. It is a diesel and jet fuel crisis. It is a refined product crisis.'

The ADCOP pipeline operated faithfully to its design purpose. It succeeded in sending crude oil outside Hormuz. But the war destroyed the design assumptions of the pipeline. In 2008, when this pipeline was being constructed, Iran's drone technology was at a rudimentary level. Iran in 2026 was a nation with vast quantities of kamikaze drones capable of flying thousands of kilometers and striking targets, and precision ballistic missiles. Infrastructure built on risk assessments from 40 years ago was standing before the war technology of 40 years later.

14.3 Iraq-Turkey Pipeline

Iraq's situation was fundamentally different from Saudi Arabia and the UAE. For Saudi and UAE, pipelines were alternative routes. It meant diverting a portion of existing exports to a different path. For Iraq, the pipeline was the only escape route.

Before the war, Iraq produced approximately 4.2 to 4.5 million barrels of crude oil per day. More than 3.3 million barrels of this exited the Persian Gulf through ports in the southern Basra region. When the Strait of Hormuz was blockaded, this route was completely cut off. In early March, Iranian drones and missiles struck tankers and port facilities in southern Iraq, bringing operations at Basra terminals to a complete halt.

When exports stop, production must also stop. This is because storage tanks have limits. If crude oil is pumped but has nowhere to be sent, once the tank fills up, the valve of the oil well must be shut off. Oil Minister Hayan Abdul Ghani announced that Iraq's crude oil production had dropped to 1.4 to 1.5 million barrels per day. This was about one-third of pre-war production levels. Exports were virtually zero.

Approximately 90% of the Iraqi government's budget depends on oil export revenue. Zero exports meant the state's finances approached zero.

In this situation, the world's attention focused on the Iraq-Turkey Pipeline (ITP). Starting from the Kirkuk oil field in northern Iraq and running 970 kilometers to reach Ceyhan port on Turkey's Mediterranean coast, this pipeline was Iraq's only overland route for exporting crude oil without going through Hormuz.

The pipeline consisted of two pipes, 46 inches and 40 inches, with a combined design capacity of 1.6 million barrels per day. If this pipeline had operated normally, it could have diverted nearly half of Iraq's southern exports to the Mediterranean. It was a scale that could have provided crucial relief to the European market.

But this pipeline was empty.

To understand why, we must return to March 2023. The International Court of Arbitration had issued a ruling holding the Turkish government liable for approximately 1.5 billion dollars in damages. The court held Turkey accountable for allowing the Kurdistan Regional Government (KRG) to independently export crude oil without approval from the Baghdad central government. Turkey resisted the ruling and closed the pipeline's valve. Crude production in the Kurdish region fell roughly 72 percent.

For the next two and a half years, Baghdad and Erbil (the KRG capital) engaged in a tug of war over resuming exports. In September 2025, with American mediation, a temporary agreement was reached, and exports resumed at a rate of 180,000 to 190,000 barrels per day. This represented only 12 percent of the pipeline's original capacity.

And then war came.

Baghdad made a request of Erbil. Send crude oil produced from the Kirkuk oil field through the pipeline in the Kurdish region to Jihan. At minimum, 100,000 barrels per day, preferably 250,000 barrels. Combining this with production from oil fields in the KRG region, 450,000 barrels per day was possible. In a world economy hungry for crude oil, the proposal seemed reasonable.

Erbil refused.

There were conditions. Baghdad would have to lift the restrictions on dollar transactions that it had imposed on the Kurdish region beginning in January 2026. Under these measures, Kurdish merchants had been unable to secure the foreign exchange needed to pay for imports. Erbil called this "economic strangulation." The list of demands also included restructuring the tariff system, guaranteeing the Kurdish banks access to the official exchange rate, and ending attacks by Shia militias on Kurdish oil facilities.

Baghdad refused to link the two issues. Baghdad's position was that crude oil exports and tariff matters were separate concerns. In an official statement, the Ministry of Oil characterized the KRG's stance as "irresponsible behavior seeking to exploit Iraq's critical situation." It cited Articles 110, 111, and 112 of the Constitution, reminding everyone that oil and gas were the common assets of all Iraqis.

Masoud Barzani, the Kurdish leader in Erbil, urged both sides to meet. "We must stop opportunists who want to deepen this division."

On March 16, Oil Minister Abdul Ghani unveiled an alternative. Baghdad would restore an old pipeline segment bypassing the KRG region, routing through Mosul. "Only about 100 kilometers of hydrostatic testing remain, and it can be completed in a week." Once this section became operational, Baghdad could independently send 200,000 to 250,000 barrels per day of Kirkuk crude to Jihan.

However, this section had been severely damaged by repeated bombings by armed groups, including ISIS and the Kurdistan Workers' Party (PKK), since 2014. Repairs could take months, or possibly years. Yerevan Saeed, a researcher at the Middle East Institute, assessed it this way: "Even if Baghdad began repairs tomorrow, the timeline alone would be unrealistic in the midst of a national emergency."

There was another problem. The pipeline agreement with Turkey itself was set to expire on July 27, 2026. Turkey's Energy Minister Alparslan Bayraktar told Anadolu Agency: "A new energy architecture will emerge after the crisis, and we are thinking about what opportunities that might present for us." Ankara's calculation to turn the crisis into an opportunity to secure a new agreement on more favorable terms was becoming apparent.

On March 18, a breakthrough finally came. Masrour Barzani, Prime Minister of the KRG, issued a statement: "Considering the emergency situation facing our country and the responsibility we all share, we have decided to permit the flow of crude oil through the Kurdish region pipeline as quickly as possible." Iraq's state-owned North Oil Company announced that 250,000 barrels per day of Kirkuk crude had begun flowing toward Jihan. Brent crude fell 1.38 percent to $101.99 per barrel, and West Texas Intermediate (WTI) dropped 1.89 percent to $94.39. The market heaved a sigh of relief.

But that relief was short-lived. Two hundred fifty thousand barrels. This represented only 7.6 percent of the 3.3 million barrels per day that had left Basra before the war. Yesar Al Maleki, a Gulf region analyst at Middle East Economic Survey (MEES), told The National: "While these measures could restore limited export capacity, they cannot compensate for the loss of Basra's exports. The necessary infrastructure to divert large quantities of crude oil from the south through alternate routes does not currently exist."

Iraq's pipeline story concealed a tragic structure. It was not that there were no pipes to send the oil. The pipes existed. A pipeline with capacity for 1.6 million barrels per day stretched from Kirkuk to Jihan. What blocked that pipeline was not only physical damage. It was the decades-old dispute between Baghdad and Erbil, residual resentment over revenue distribution, dollar transaction restrictions, clashes over constitutional interpretation, the fallout from international arbitration rulings, and Turkey's strategic calculations. All of this had created an invisible valve inside the pipeline.

An oil state unable to move its oil. Yerevan Saeed of the Middle East Institute summarized the situation in one sentence: "This is not sovereignty. This is paralysis. And that paralysis is a gift only Iraq's competitors can afford to receive."

14.4 Combined 9 Million versus 20 Million

Let us gather the numbers.

Saudi Arabia's east-west pipeline. Designed capacity of 7 million barrels per day. After subtracting 2 million barrels for domestic refinery supply, export capacity is 5 million barrels. Yet the effective loading capacity of the Yanbu port ranges between 4 million and 4.6 million barrels. There is a gap between what the pipeline pushes out and what goes to sea.

The UAE's ADCOP pipeline. Nominal capacity of 1.5 million barrels per day, with a maximum of 1.8 million. Average actual export volume for the month of March was 1.62 million barrels. However, Fujairah port had to intermittently halt operations due to repeated drone strikes.

The Iraq-Turkey pipeline. Designed capacity of 1.6 million barrels per day. Actual flow rate after resumption on March 18 was 250,000 barrels.

The International Energy Agency (IEA) summarized the reality of these pipelines in a Hormuz Strait factsheet released in February: "Only Saudi Arabia and the UAE possess operational pipelines capable of exporting crude oil while bypassing the Strait of Hormuz, with an estimated additional available capacity of 3.5 to 5.5 million barrels per day (b/d)."

In peacetime, approximately 20 million barrels per day pass through the Strait of Hormuz. According to UN data, in 2024, crude oil and condensate passing through the strait amounted to 14 million barrels per day, while refined petroleum products totaled 6 million barrels per day.

If the IEA's estimate of effective bypass capacity is correct at 3.5 to 5.5 million barrels per day, the supply shortfall remaining in the market is 14.5 to 16.5 million barrels per day. This exceeds Saudi Arabia's total daily production (approximately 10 to 12 million barrels). No oil-producing nation in the world can fill this gap.

But this arithmetic concealed one additional dimension.

What can be sent through a pipeline is crude oil. Thick, dark oil. It becomes diesel, jet fuel, naphtha, and liquefied petroleum gas only after processing in a refinery. Of the 20 million barrels per day passing through Hormuz, approximately 6 million barrels were already-refined petroleum products. About 30 percent of the diesel that Europe imports and roughly half of its jet fuel came from the Middle East. A pipeline cannot move these refined products in large quantities. A crude oil pipeline carries only crude oil.

Even more fatal was liquefied natural gas (LNG). Qatar is one of the world's largest LNG exporters. Approximately one-quarter of global LNG trade passes through Hormuz. LNG is a substance that must be cooled to minus 162 degrees Celsius to remain in liquid form. It cannot be put into a pipeline. It can be transported only aboard special carriers called Q-Max vessels. Those ships could depart only through the waters of the Persian Gulf. Qatar has no bypass pipeline. The same is true for Kuwait. When Hormuz closes, both countries face a complete halt to their exports. Goldman Sachs forecast that Qatar and Kuwait's oil production could decline by 25 percent or more.

Ellen Wald, founder of Transversal Consulting and author of Saudi Inc., pointed out this structural dilemma to Middle East Eye: "To maximize Saudi crude oil exports through the east-west pipeline, that pipeline would have to abandon its function of transporting natural gas liquids and petroleum products." Save the crude and the gas dies. Save the gas and the crude declines. A single pipeline cannot perform both roles simultaneously.

Engineering News-Record diagnosed the essence of this situation as follows: "The pipeline system was designed around crude oil, not for the complete spectrum of hydrocarbons passing through Hormuz. Refined products,diesel, jet fuel, naphtha, and liquefied petroleum gas (LPG),require separate infrastructure or maritime transport, which bypass pipelines cannot provide."

In the end, this was a problem of arithmetic. And arithmetic was cruel.

Volume passing through Hormuz: 20 million barrels per day. Effective supply capacity via pipeline bypass: 3.5 to 5.5 million barrels per day. Absolute supply shortfall remaining in the market: at minimum, 14.5 million barrels per day.

When we convert these numbers to dollars, their weight becomes tangible. At one hundred dollars per barrel, a daily supply shortfall of 14.5 million barrels means energy worth 1.45 billion dollars per day (roughly two trillion won) vanishes from the world market. Over a month, that is 43.5 billion dollars (roughly fifty-nine trillion won).

Saudi Arabia and the UAE's pipelines were a magnificent engineering achievement. The fact that insurance taken out forty years earlier would activate forty years later was itself remarkable. As Aramco CEO Nasser put it, Saudi Arabia had said it was "meeting most of its customers' requirements by using storage facilities in Asia, the Mediterranean, and northwestern Europe." But in the same conversation, he added one caveat: "provided this does not persist in the long term."

That conditional sentence said everything. The pipeline was a device for buying time, not for replacing the sea. It was a short-term lifeline, not a long-term solution.

Steel pipe can pierce a desert. It can tunnel through mountains. But it cannot replace the sea's capacity to carry, simultaneously, 20 million barrels of crude oil, 6 million barrels of refined products, and one-quarter of the world's LNG trade. When a waterway twenty-one miles wide closes, 1,200 kilometers of pipeline cannot fill that void. This was the arithmetic the world learned in March 2026.

Attorney Kim Kyung-jin, Artificial Intelligence Expert

Specialist in AI Policy and Law · Former National Assemblyman · Multiple Publications

If this book has rested in your hands even briefly, please support it so that the next story can reach the world.

(Voluntary support requested. Account: NH Bank 302-1096-0948-81 Account Holder: Kim Kyung-jin)