Washington, Saudi Arabia, Iraq, and Kuwait Are All Looking at Neutralizing Iran’s Leverage

The 2026 Strait of Hormuz crisis has exposed a critical vulnerability in global energy markets: Iran’s ability to weaponize the narrow waterway through which up to 20–21 million barrels per day (bpd) of oil — roughly one-third of seaborne global trade — and about one-fifth of the world’s LNG normally flow. Following the U.S./Israeli military operation against Iran that began on February 28, 2026, Tehran’s effective blockade triggered oil price spikes of over 70% and forced major production cuts across Gulf producers.

In response, Washington and key regional allies — Saudi Arabia, Iraq, and Kuwait — are accelerating a multi-pronged strategy of pipeline expansions, new infrastructure, and alternative corridors. The goal is clear: structurally reduce dependence on the Strait of Hormuz, erode Iran’s geopolitical leverage, and minimize the economic pain (and lost revenue for Tehran) from any future disruptions.

Washington’s Strategic Push

The United States is no longer content with short-term crisis responses. Instead, it is actively supporting permanent infrastructure that bypasses Hormuz. This includes diplomatic pressure, technical assistance, and facilitation of deals that diversify export routes and global supply sources.U.S. officials and envoys have been directly engaged with Iraq on pipeline rehabilitation and new projects. Recent high-level talks underscore this coordination.

Iraq’s Pipeline Acceleration and U.S. Collaboration

Iraq, heavily reliant on southern exports through the Strait (pre-crisis volumes around 3.3–3.4 million bpd), has been among the hardest hit. Production in southern fields dropped sharply as storage filled up.

Baghdad is now fast-tracking multiple bypass options:

• Kirkuk–Ceyhan Pipeline (to Turkey’s Mediterranean coast): Reactivated and ramping up. Current flows around 200,000 bpd, with ambitions to reach 650,000+ bpd by integrating northern federal and Kurdistan Region volumes.
• Kirkuk–Baniyas Pipeline (to Syria’s Mediterranean coast): Historical capacity ~300,000 bpd. Iraq is advancing rehabilitation through a memorandum of understanding with U.S. investment firm TI Capital. In mid-June 2026, Iraqi Prime Minister Ali Falih al-Zaidi met U.S. presidential envoy Tom Barrack in Baghdad to discuss advancing this project alongside broader regional security and energy cooperation.
• Basra–Haditha Pipeline (new strategic line, ~700 km, target capacity 2.25–2.5 million bpd): This would move southern oil northward, enabling onward flows to Turkey or Syria and fully bypassing Hormuz. Iraq’s cabinet has approved consultancy contracts (including with U.S. firm KBR) and preliminary agreements.

In early July 2026, Iraq’s cabinet approved heads of agreement and non-disclosure agreements with a consortium including TI Capital, Chevron, and Qatar’s UCC to conduct technical and financial feasibility studies on strategic routes such as Basra–Haditha–Kirkuk–Ceyhan and Basra–Haditha–Baniyas.

These moves, backed by U.S. diplomatic engagement, aim to restore and expand Iraq’s export flexibility while fostering regional energy ties (including with post-Assad Syria).

Saudi Arabia’s Established and Expanding Bypass Capacity

Saudi Arabia has long prepared for this scenario. Its East–West Pipeline (Petroline) runs from eastern oil fields to the Red Sea port of Yanbu. Capacity has been expanded toward 7 million bpd, though export terminal constraints have limited full utilization in the current crisis. This route has allowed Riyadh to maintain significant exports even when Hormuz flows were disrupted.

Saudi infrastructure is also central to the fast-tracked India–Middle East–Europe Economic Corridor (IMEC), which includes overland rail segments that could further diversify trade away from vulnerable maritime chokepoints.

Kuwait Explores Regional Pipeline Tie-Ups

Unlike Saudi Arabia and the UAE, Kuwait has no domestic pipeline that bypasses the Strait. Its oil exports are almost entirely dependent on Hormuz, making it particularly vulnerable.Kuwait Petroleum Corporation (KPC) is now actively pursuing solutions through regional cooperation. KPC CEO Sheik Nawaf al-Sabah stated at the Atlantic Council Global Energy Forum that Kuwait is in discussions with Saudi Arabia and the UAE “to look at how to expand the pipeline system that they have to accommodate Kuwaiti barrels coming up.”

This could involve integrating Kuwaiti crude into expanded Saudi or Emirati systems heading to Red Sea or Gulf of Oman terminals. Kuwait is also exploring options like storage facilities in Oman. Officials acknowledge that pipelines are “only as safe as the export facility at the end,” but the push reflects a broader GCC recognition that reducing Hormuz dependence is now a strategic priority.

Broader Context and Long-Term Impact

These efforts are part of a larger architecture that includes:

• UAE’s Habshan–Fujairah Pipeline expansions (with a second parallel line fast-tracked for completion around 2027, potentially doubling bypass capacity).
• Short-term measures like truck convoys through Iraq/Syria (moving ~125,000 bpd in earlier phases).
• The IMEC corridor, redesigned post-crisis to anchor eastern legs in Oman and route overland through Saudi Arabia and Jordan.

Combined existing and planned bypass capacity from Saudi, UAE, and Iraq projects could eventually handle a substantial portion of the ~20 million bpd that normally transits Hormuz. While not a complete replacement in the near term, the cumulative effect is to make future Iranian blockades far less economically damaging to global markets and far less lucrative as leverage for Tehran.By building redundant export routes, Washington and its partners are systematically diminishing Iran’s ability to hold global energy supplies hostage — and reducing the revenue Tehran derives from threatening or controlling that critical chokepoint.

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