Gulf countries mulling alternative oil routes

Iran has threatened that any foreign attack on its nuclear installations will be met with obstruction of strategic waterways in the Gulf.

By THE MEDIA LINE
oil tanker 88 298 (photo credit: Ariel Jerozolimski)
oil tanker 88 298
(photo credit: Ariel Jerozolimski)
Kuwait and Saudi Arabia are reportedly mapping out alternative oil export routes, preparing for a scenario in which Iran cuts off major oil shipping lines after its nuclear facilities are attacked. Iran has threatened that any foreign attack on its nuclear installations will be met with obstruction of strategic waterways in the Gulf. Countries in the Gulf collectively have about 62 percent of the world's oil reserves. The Gulf's Strait of Hormuz is the most important and strategic waterway for oil exports in the region and any obstruction there could cause a crisis in the global oil industry. If Iran is attacked by foreign troops, Teheran will do all it can to defend itself, including impeding navigation in the Strait of Hormuz, commander of Iran's Revolutionary Guards, Muhammad Ali Al-Jaafari, told the government newspaper Jam e-Jam on Saturday. He said this would likely push oil prices even higher. Alternative routes could be the use of pipelines that run across through Saudi Arabia all the way to the Red Sea, Paul Rogers, a professor of peace studies at Bradford University, told The Media Line. Such pipelines do exist, but Rogers said he doubted whether they had the capacity to make up for any major shortfalls caused by interruptions at the Strait of Hormuz. New pipelines would take at least two years to build, he predicted. "I assume they'd run the existing pipelines to the absolute maximum, but I doubt that would have a great impact," Rogers said. He estimated that any interruption in the near future in the Gulf waterways would cause oil prices to soar, regardless of whether alternatives were in place. "If there were any kind of disruption you'd get an immediate increase in oil prices just as a result of the expectation of shortages and the result of speculation. I think it would hurt the global industry massively, given the shortages we have at the moment and the nature of the speculation market."