The Backup Routes Are Failing

Analysis
Written By Melissa
View from orbit of the Strait of Hormuz connecting the Persian Gulf with the Gulf of Oman, with Iran to the north and the Arabian Peninsula to the south.

View from orbit of the Strait of Hormuz connecting the Persian Gulf with the Gulf of Oman, with Iran to the north and the Arabian Peninsula to the south.

On September 10, Saudi Arabia’s East–West oil pipeline was hit in multiple attacks in the Riyadh and Madinah regions. The Saudi Energy Ministry said the line was shut down as a precaution while emergency and technical teams secured the pipeline and assessed its safety. The government has not publicly given a date for its return to service.

That uncertainty matters because the pipeline has spent much of this war doing exactly what it was built to do: letting Saudi crude avoid the Strait of Hormuz. Earlier this year, Saudi Aramco ramped it all the way to its maximum capacity of seven million barrels a day as shipping through Hormuz became constrained. In its first-quarter results, Aramco described the pipeline as a “critical supply artery” that had helped offset the energy shock. Saudi Aramco’s Q1 statement made unusually explicit just how important the bypass had become.

Before this latest shutdown, around four million barrels a day were moving through the line to Yanbu on the Red Sea. That is approximately 4 percent of global oil supply. Once the pipeline stopped, Saudi Arabia began relying on crude already positioned at Yanbu and smaller stocks elsewhere. Three industry sources told Reuters that the Yanbu inventories could sustain current export rates for roughly five to seven days. Saudi stocks at Egypt’s Ain Sukhna and Sidi Kerir ports provide some additional time, and repair estimates still vary. One estimate runs as long as five to six weeks; others anticipate at least partial pumping sooner.

Saudi Arabia still has the crude. The immediate constraint is the infrastructure required to get it to buyers while the principal eastern maritime route is constrained and the western bypass is offline.

That distinction has become increasingly important because, only a little more than two weeks ago, the White House was describing the Strait of Hormuz as a problem the United States had essentially solved.

On August 28, the administration published a release titled “President Trump Was Right: America Controls the Strait of Hormuz”. It said Iranian mines had been cleared from international shipping lanes, nearly 1,500 commercial vessels carrying 750 million barrels of crude had passed under U.S. protection, Iranian oil exports had been stopped by the blockade, and Gulf exports had recovered to about two-thirds of their previous level. Trump had repeatedly described American control of the strait as “total.”

There was observable capacity behind the claim. Ships were moving again. U.S. naval operations had reduced Iran’s ability to simply stop traffic through the waterway. On September 2, Energy Secretary Chris Wright said that 17 million barrels of oil had moved through Hormuz in a single day, the largest volume since the war began disrupting traffic. Reuters reported the figure at the time.

Traffic has not held at that level. Current estimates put oil flows through Hormuz at roughly six to eight million barrels a day, and overall vessel traffic remains far below the prewar baseline. Over the weekend, only four commodity vessels exited the Gulf and ten entered, compared with a recent ten-day average of fourteen a day and roughly 125 vessel transits per day before the war. Shipping data reported by Reuters show how far the system remains from normal even when the strait is technically open.

Oil traders are pricing that uncertainty into the physical market. Brent moved above $108 on Monday. Asian refiners are paying higher premiums for crude from the Middle East and increasingly competing for alternatives from West Africa and the United States. Some U.S. crude cargoes have reportedly sold into South Korea at premiums nearly twice what buyers were paying last month. Reuters’ reporting from Asian oil markets also puts current Hormuz flows in the six-to-eight-million-barrel range.

And the route Saudi Arabia has been using to reduce its dependence on Hormuz now has pressure at both ends.

The East–West pipeline carries crude across Saudi Arabia to Yanbu so it can leave through the Red Sea. Ships using that route eventually have to contend with the Bab el-Mandeb, the narrow passage between Yemen and the Horn of Africa.

The Houthis have been gaining ground around it. They took the Red Sea port of Mokha and Mayun Island, which sits inside the Bab el-Mandeb itself. They have since taken Greater and Lesser Hanish, two more strategically located islands in the Red Sea. Shipping through the region had already fallen dramatically after years of Houthi attacks; Associated Press reporting put the decline at roughly 60 percent even before the latest territorial gains.

The sequence is becoming more important than any individual event. Hormuz becomes dangerous and constrained, increasing the value of the East–West pipeline. The pipeline shifts Saudi crude to Yanbu, which makes Red Sea access more important. The Houthis move into positions around the Bab el-Mandeb. Then the pipeline itself is hit and shut down.

The response to one point of stress keeps increasing the load carried by another part of the structure.

The pipeline is one buffer. Storage at Yanbu is another. Red Sea access, tanker rerouting, U.S. naval escorts, alternative crude suppliers and Saudi diplomatic relationships can all absorb some portion of a disruption.

They do not have to disappear for the structure to change. A route that still functions can become slower and more expensive. Inventories can remain available while being steadily drawn down. Military protection can continue while requiring more ships, interceptors, intelligence and political commitment. Buyers can find alternative crude while paying much more for it.

A lot of resilience looks like this in practice. Something breaks and the rest of the system compensates. Traffic moves somewhere else. Inventories replace interrupted supply. Governments spend money. Ships take longer routes. Buyers bid against one another for substitutes. For a while, the headline can still be that the system is functioning.

Saudi Arabia has already been through an earlier version of this during the same conflict. Attacks in April reduced East–West pipeline capacity by about 700,000 barrels a day and damaged other energy facilities. Three days later, the Energy Ministry said the line had been restored to its full seven-million-barrel capacity, calling the quick repair evidence of the kingdom’s “operational resilience.”

Five months later, the same pipeline matters even more because Hormuz remains constrained, and it has been hit again. At the same time, the maritime route it feeds is becoming more exposed to Houthi control and attack.

Saudi Arabia’s fallback route is now under pressure

This is the part of the crisis that gets harder to see when each development is treated as its own story.

A vessel is hit, and shipping adjusts. Hormuz becomes dangerous, and crude moves overland. The pipeline stops, and storage covers some of the gap. Buyers look farther away for barrels. Insurance prices the additional risk. Naval forces keep other traffic moving.

There are still answers available.

I’m interested in what happens to the next disruption after several of those answers are already carrying more weight than they were before.

Whether Iran can literally close Hormuz is one question. Whether the Houthis can literally close Bab el-Mandeb is another. Whether Saudi exports fall to zero after seven days is another, and the evidence does not support that claim.

The accumulation across those questions is more consequential for the Risk Monitor than any one of them by itself.

The United States is embedded throughout this structure. American forces are policing traffic around Hormuz and enforcing the blockade on Iranian exports. Gulf oil producers have built their security assumptions around American military capacity for decades. Saudi Arabia has also been asking Washington for help as the Houthi front expands. Crown Prince Mohammed bin Salman recently sought additional U.S. military assistance against the Houthis. Trump declined to authorize direct American strikes but agreed to provide intelligence-sharing and targeting support. On Monday, bin Salman met CENTCOM commander Admiral Brad Cooper in Jeddah as the conflict continued to spread. Reuters reported the meeting and U.S. support arrangements.

That makes the usual measures of military success incomplete. Reopening a shipping lane matters. Intercepting a missile matters. Destroying a launch site matters. Enforcing a blockade matters.

They tell us what the United States is capable of doing at a particular point in the conflict. They do not necessarily tell us whether the wider structure is becoming easier or harder to sustain.

The U.S. can retain enough military power to keep some traffic moving through Hormuz while the economic and logistical burden migrates elsewhere. Iranian exports can be constrained while Saudi Arabia loses access to infrastructure designed to compensate for the same disruption. One corridor can become safer while another becomes more important and more exposed.

Some of those costs are already arriving in the United States through channels that do not look military.

U.S. ten-year Treasury yields reached 5 percent on Monday, their highest level since 2023. Oil-driven inflation concerns are one contributor, alongside heavy debt issuance, fiscal concerns and other pressures. Reuters’ bond-market reporting makes the mixed causality clear.

Markets are also overwhelmingly expecting the Federal Reserve to raise interest rates this week. Reuters put the implied probability at about 90 percent on Monday, with renewed energy inflation among the pressures policymakers are confronting. Morning Bid also noted that Brent had climbed back above $108 after the pipeline shutdown and renewed regional escalation.

A pipeline attack in Saudi Arabia does not mechanically produce a Federal Reserve rate increase. The U.S. economy is carrying plenty of other pressures. The connection matters because energy moves through so many other prices. It enters freight, manufacturing and food. It changes inflation expectations. Interest-rate decisions then reach mortgages, credit cards, business financing, government debt service and employment.

There is a diplomatic version of the same problem. Gulf governments have to keep recalculating how much security Washington can actually provide, how much regional risk they are willing to absorb, and how much room they need to preserve for relationships with Iran and other regional powers. A planned meeting involving Saudi Arabia, Iran and other Gulf states over maritime security was postponed Monday as the crisis worsened. Reuters’ live coverage followed the postponement alongside the renewed rise in oil prices and continued Houthi attacks.

“Winning” and “losing” do not describe this particularly well.

The United States can retain overwhelming coercive capacity while the number of things that capacity has to hold together keeps growing. The relevant question for this project is how much compensatory capacity remains available before another disruption arrives.

What I’m watching now

I would not forecast that Saudi Arabia simply stops exporting oil when the five-to-seven-day Yanbu inventory window closes. The reporting does not support that certainty. There are stocks elsewhere. Repairs could restore part of the pipeline. Shipping patterns can change. Saudi Arabia may be able to redirect additional volumes through other routes.

What matters over the next several days is whether those alternatives restore some slack to the structure or simply become the next mechanisms carrying an unusual amount of load.

If the East–West pipeline remains substantially offline while Yanbu inventories decline, relatively small additional disruptions should begin producing larger effects than they would have earlier in the conflict. Shipping and insurance costs should remain high. Buyers should continue paying premiums for crude outside the Gulf. Saudi officials should have increasing incentives to restore at least partial pipeline service and to reduce threats around Red Sea shipping. The economic effects should continue appearing farther from the conflict through fuel prices, inflation expectations and financial conditions.

There are also clear ways for this assessment to weaken. A durable restart of the East–West pipeline would restore significant export capacity. Sustained recovery in Hormuz traffic would reduce the load on alternative routes. Lower tanker and insurance costs would suggest that markets see the threat receding. Safer passage through Bab el-Mandeb and replenishing inventories would add back some of the redundancy that has been disappearing.

For now, several of those indicators are moving in the opposite direction.

The East–West pipeline reduced Saudi Arabia’s dependence on Hormuz. Yanbu storage is now buying time while the pipeline is unavailable. The Red Sea provides the pipeline’s route to global buyers while the Houthis acquire more leverage around it. U.S. military power is keeping part of the larger architecture functioning while more of that architecture requires active protection.

That is the structure I’m watching. The amount of stress matters, but so does the condition of the places the stress is supposed to go.

Current Risk Assessment · September 14, 2026

Current assessment: Compensatory capacity in the U.S.-linked Gulf energy and security architecture is degrading.

Expected if this assessment holds: Shipping and insurance costs remain elevated; oil prices become increasingly sensitive to additional disruptions; export inventories continue to be drawn down; Saudi Arabia intensifies efforts to restore pipeline capacity; U.S. military and diplomatic commitments remain under pressure; and economic spillovers continue appearing through energy prices, inflation and financial conditions.

Would weaken the assessment: Durable restoration of the East–West pipeline, sustained recovery of Hormuz flows, declining Red Sea shipping risk, replenishing inventories, and stabilization without continued reliance on increasingly expensive workarounds.

Status: Open.

Sources

Melissa