GCC plans pipelines to offset Tehran oil threat

Gulf governments are planning oil pipelines that will bypass the world’s most vulnerable energy choke point, the Strait of Hormuz, aiming to avoid possible Iranian threats to global oil shipments, according to Dow Jones Newswires.
If built, two pipelines could ferry as much as 6.5mn barrels of oil a day around the strait, an amount equal to nearly 40% of the daily exports currently shipped through the narrow channel at the entrance of the Gulf, says the DJN report.
Construction of the first, smaller line is forecast to begin this year, the Dubai branch of the UK’s Standard Chartered Bank reported. A second, more ambitious line carrying some 5mn barrels a day is still under discussion and could take a decade to build.
The attraction of the plan for oil traders is easy to understand. Around two-fifths of the world’s traded oil is shipped by tanker through the Hormuz Strait. But the 54km wide passage is highly vulnerable to threats from neighbouring Iran.
With tensions rising between Iran and the West over its nuclear programme, Iran’s Supreme Leader Ayatollah Ali Khamenei had warned that his country could disrupt the world’s oil supply if it comes under attack.
Bypassing the Strait of Hormuz could also lead to a drop in the price of crude.
Even before the crisis with Iran, traders have marked up prices by a so-called “security premium” of a few dollars a barrel because of fears of disruption in the turmoil since the 2003 US-led invasion of Iraq.

Gulf Times