Goldman projects Gulf pipelines can bypass 60% of Hormuz oil by 2027

The effective closure of the Strait of Hormuz since the U.S.-Iran conflict began in February has catalyzed what may become a permanent reshaping of Gulf energy infrastructure, as producers fast-track pipeline projects and analysts project a future where the world's most critical oil chokepoint carries far less strategic weight.

Pipeline Buildout Gains Momentum

Goldman Sachs The Goldman Sachs Group, Inc. ↘ 4.68% estimated in a note published Sunday that effective pipeline capacity bypassing Hormuz will increase by 3.8 million barrels per day by the end of 2027, which would allow more than 60 percent of pre-war Gulf oil exports to avoid the strait. The projection underscores how Gulf producers have shifted from contingency planning to active construction.thedarksideoftheboom.substack+1

The UAE is leading the charge. ADNOC CEO Sultan Ahmed Al Jaber said in May that the country had completed nearly half of its new West-East 1 pipeline, which will double the UAE's strait-free export capacity to 3.6 million barrels per day by 2027. Saudi Arabia has meanwhile ramped its East-West pipeline — running from the Abqaiq oil field to Yanbu on the Red Sea — to its full capacity of roughly 7 million barrels per day. Kuwait is in talks with Saudi Arabia and the UAE about potential new pipeline routes that would connect its production to terminals outside the waterway, according to the Financial Times.cnbc+2

President Trump's threat in June to impose U.S. tolls on the Strait of Hormuz if a final deal with Iran is not reached within 60 days has added urgency. Reuters reported that the quest to bypass Hormuz will "reshape the region," noting that the conflict revealed the perils of depending on a single chokepoint.reuters+2

China's Demand Collapse as a Buffer

While infrastructure projects unfold, the market has avoided a full supply crisis in large part because of China's dramatic pullback in crude purchases. According to J.P. Morgan JPMorgan Chase & Co. ↘ 2.55% analysts cited by CNBC, China's import reduction accounted for approximately 74 percent of the decline in global crude oil trade. Chinese seaborne imports fell from about 11.6 million barrels per day in 2025 to roughly 6.4 million barrels per day in June, according to Kpler data cited by Bloomberg.bloomberg+3

JPMorgan projects China will return as a major oil buyer beginning in August as its petrochemical sector recovers and Beijing moves to rebuild depleted strategic reserves. That timeline introduces fresh uncertainty: if Hormuz flows do not fully normalize before Chinese demand rebounds, upward pressure on prices could return.cnbc+1

A Structural Shift Ahead

Non-OPEC+ producers including the United States, Canada, and Brazil have also helped absorb the disruption, with Société Générale analysts noting that increased output from those nations — alongside strategic inventory releases — prevented a repeat of the 1973 crisis. Goldman Sachs said this week that oil flows through the strait had recovered to about 70 percent of normal levels but warned renewed tensions could set back the recovery.energyconnects+1

The broader trajectory points toward a Gulf that is structurally less dependent on Hormuz. As Reuters noted, the strategic directive from the region's producers is now clear: "diversify at any cost."reuters