Iran's Strait of Hormuz leverage wanes as Gulf nations build pipelines

Internal calls to end the Iran‑Iraq war have grown louder as Gulf neighbours plan alternative pipelines to cut reliance on the Strait of Hormuz, a waterway the Iranian regime has described as the cornerstone of its security order. The debate inside Tehran now centres on whether the strait’s strategic value is eroding and whether the country should seek a negotiated settlement before its economic position weakens further.

The strait, through which roughly 20 % of the world’s oil passes, has long been a key lever in Iran’s foreign‑policy toolkit. Yet analysts say that the construction of new pipelines and export routes by Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman could halve the strait’s importance within three years and reduce it to a minor conduit in six. The Forum of Economic Activists, headed by economist Hamid Paktinat, estimates that Saudi Arabia’s reliance on Hormuz could fall from 70 % to 15 %, while the UAE’s would drop from 50 % to 15 % and Iraq’s from 100 % to 30 %. Kuwait, Qatar and Bahrain would similarly see their dependence cut by half, and Oman could become a major coastal oil transfer hub.

The urgency of the issue is reflected in the statements of senior Iranian officials. President Masoud Pezeshkian said the war “must end at some point” and urged that negotiations begin while Tehran still believes it has a strong bargaining position. Parliamentary speaker Mohammad Bagher Ghalibaf warned that “if people are hungry” and there is no economic growth, the country cannot sustain its security, arguing that military power alone cannot compensate for a failing economy. Central bank governor Abdolnaser Hemmati cautioned that the country faces “four or five major challenges simultaneously” – maximum sanctions, blockade, cutting off oil exports and a budget imbalance – each putting pressure on the economy.

The strait’s strategic value is also being challenged by operational changes. Between 1 and 19 August, only 112 oil and gas tankers transited the waterway, with 79 % using unconfirmed routes, 19 % using the northern Iranian route and 2 % using the Omani route. Many ships on the unknown routes likely turned off their transponders and relied on U.S. protection along the Oman corridor. Saudi, Emirati, Qatari and Kuwaiti oil companies have chartered a small group of tankers to move cargo through the southern route to the Gulf of Oman, where they hand the oil over to customer‑owned vessels, shifting risk from shipping companies to state‑owned producers and the U.S. government. Iran has identified about 48 ships it plans to blacklist or fine.

U.S. officials have highlighted the role of American naval support. Secretary of Energy Chris Wright said the navy had assisted in the transfer of more than 15 million barrels of oil and other products and claimed an average daily transfer of over 8 million barrels through the strait. However, independent trackers estimate a daily volume closer to 6 million barrels, and the International Maritime Organization’s Arsenio Dominguez has dismissed claims that the U.S. navy has “opened” the strait, noting the small number of ships that actually transit it.

The strategic calculus for Iran is shifting. Geopolitical commentator Hamid Asefi argues that a threat repeatedly used can become a “political habit” that loses deterrence. He suggests that the focus should shift from making the passage difficult to ensuring it is so safe and stable that all parties depend on Iran to maintain the order. The paradox is that a lever that is constantly flaunted can become its own enemy, prompting rivals to plan ways to reduce their vulnerability.

Meanwhile, the United States is preparing to intensify pressure on Iran’s economy across five key sectors – gold, cryptocurrency, technology, shipping and aviation – in an effort to erode the country’s resilience. The outcome of these moves will determine whether the strait of Hormuz remains a central element of Iran’s security doctrine or becomes an increasingly marginal factor in the region’s energy infrastructure.