Riyadh wants 10 mn bbl/d of pipeline capacity outside the Gulf, and a converted gas line is the first step

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WHAT WE’RE TRACKING TODAY

TODAY: Saudi wants to pipe 10 mn bbl / d around Hormuz + Iraq’s first crude trucks could reach Syria soon

Good morning, friends. Gulf producers are busy building ways to move crude around Hormuz, and today’s issue tracks how fast that’s happening.

Saudi Arabia wants to pipe up to 10 mn bbl / d of crude outside the Gulf within two to three years, well above the 7 mn bbl / d its East-West Pipeline can carry today.

Iraq hopes to start trucking crude through Syria by mid-October, about three months late. At full stretch, the route would move roughly 220k bbl / d, a small slice of Iraq’s exports. Tanker truck queues outside Baniyas have already stretched past 30 km, and they’re only carrying fuel oil so far.

The gas crunch gave Egypt every reason to speed up its energy transition, and the question now is who builds it and who pays for it.

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Issue II looks at how the deals behind these projects work, who is lending to them, and why the country is building a nuclear plant at El Dabaa alongside its solar and wind farms. We also look at whether the regional crisis has finally pushed industry toward renewables, and at the factories Egypt is counting on to build its own panels, batteries, and turbines.

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Barrels for roads

Iraq is working on paying Turkish contractors in oil for the USD 17 bn Development Road. Baghdad’sTransport Ministry said it’s setting up an oil-backed fund with Turkey that would pay Turkish companies to build the corridor in exchange for crude, INA reports. The project is still in design, with work planned in three phases running to 2050. Of the USD 17 bn, USD 6.5 bn goes to the highway and USD 10.5 bn to an electric railway, with the phases targeting 2028, 2033, and 2050, AGBI reported.

A World Bank loan covers the first phase: It upgrades existing rail lines from Baghdad to Basra and Umm Qasr in the south and to Mosul in the north, with connections to Al-Faw Port and the Turkish border at Fishkhabur. The bank approved USD 930 mn to modernize more than 1k km of the network.

Oil-for-projects surfaced in August, and Iraq has a precedent. Baghdad and Ankara held two rounds of financing talks in August, including discussions on setting up a dedicated project account and using crude to pay for all or parts of the corridor. Meanwhile, Iraq already uses a similar financing model, with China’s Sinosure financing USD 10 bn of infrastructure that is repaid in crude lifted by Zhenhua Oil and Sinochem.

Fujairah’s party of none

Empty supertankers are turning away from Fujairah — the hub off the UAE where Gulf crude changes ships outside Hormuz, as attacks in the area intensify. At least 10 very large crude carriers (VLCC) and several Suezmax tankers have either halted their journeys or reversed course while approaching the UAE port in recent days, Bloomberg reports.

Fewer ships arriving to take on cargo means longer waits for the shuttle tankers that bring it. Shuttle tankers run Gulf crude through Hormuz and pass it to larger ships waiting off Fujairah and Oman. That workaround helped Gulf exports recover toward pre-war levels, but transfers were already slow. A transfer off Oman was already taking nearly 10 days by late September as tankers waited for crews and equipment.

Shipping costs are the second squeeze:n Supertanker rates from the Middle East to China hit a record USD 656k per day in late August, more than 10 times a year earlier. Hiring a supertanker from the US to China now costs USD 80 mn more than a roughly USD 74 mn SpaceX Falcon 9 launch, Bloomberg reported, citing shipbroker Gibson. One recent booking hit USD 41 / bbl, up from an average USD 4.5 / bbl last year.

Some of the transfers have moved as far as India: Two VLCCs recently moved Gulf crude to other supertankers in India’s Gulf of Kutch, and the receiving ships sailed on toward Singapore and South Korea.

Ammonia is back on the move

A ship has sailed into the Gulf to load ammonia for the first time since the war began, aside from Iranian-linked vessels, and its cargo is headed for India. The 25k-ton Gas Aqua loaded at Saudi Arabia’s Ras al-Khair on 3–6 October, crossed Hormuz, and transferred its cargo to the Searambler off Oman on 11–12 October, S&P reports. Kpler expects it to reach India’s Paradip port by 20 October, where it will most likely go to contract customers who haven’t received Saudi volumes since March, Argus Media reports. Saudi producers delivered more than 1 mn tons to India in 2025, against 146k tons so far this year.

Most owners have stayed away, because ammonia is toxic and can be explosive, Argus says. Only three non-Iranian cargoes have crossed Hormuz since the war began, all on ships already inside the Gulf, S&P reports. With no pipeline around the strait and less room to absorb rising freight and war-risk costs, t ammonia shipments had all but stoppedeven as Gulf crude exports returned to roughly prewar levels by the end of September.

Market watch

Oil prices rose this morning after two vessels were hit in Hormuz and Iran vowed to step up attacks on shipping, Reuters reports. Brent crude futures increased USD 0.63 to USD 106.32 / bbl by 03.45 GMT, while West Texas Intermediate (WTI) gained USD 0.622 to USD 94.80 / bbl.

The Baltic Index continues its losing trajectory: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — fell 1.8% to 2,801 points on Tuesday. The capesize index dipped 3.7% to 3,994 points, while the panamax remained unchanged at 2,432 points. The smaller supramax inched up 0.7% to 1,833 points.

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Saudi Arabia targets 10 mn bbl / d of crude pipeline capacity outside the Gulf

Saudi Arabia wants to be able to pipe as much as 10 mn bbl / d of crude to destinations outside the Gulf within two to three years, Bloomberg reports, citing Energy Minister Prince Abdulaziz bin Salman. The East-West Pipeline, its main bypass route to the Red Sea, was already moving 5.8 mn bbl / d as of this week, against a total capacity of 7 mn bbl / d.

Qatar could help it get there: Prince Abdulaziz signed an MoU with Doha on Sunday to jointly explore pipelines to transport and export oil and gas, plus cooperation on refining, petrochemicals, and clean hydrogen. He signed it on the sidelines of the International Energy Forum’s ministerial meeting in Riyadh, alongside separate agreements with Egypt on oil and gas trading, transport, and storage, and with Kuwait on a power link, state news agency SPA reports. Routes, costs, and a timeline haven’t been made public yet.

BACKGROUND- The MoU moves forward talks Riyadh opened over the summer. In July, Saudi Arabia was in preliminary talks with Qatar, Kuwait, and Bahrain on adding 1–2 mn bbl / d of capacity.

The fastest barrels could come from a gas line

Riyadh is already squeezing more out of the pipes it has: The Kingdom is upgrading pumping stations along the East-West route, and an existing gas line could be converted to carry around 1.2 mn bbl / d of crude within seven to eight weeks, Bloomberg adds. Further investment could lift that to 3 mn bbl / d.

The conversion would start out temporary, since the line has to go back to carrying domestic gas by May, ahead of summer demand. Aramco is studying a dual-use setup that would let the pipeline switch between oil and gas, using additional pumping and compression infrastructure.

Egypt’s MoU covers the Mediterranean end of the chain: The agreement includes trading, transport, storage, and distribution of crude, refined products, and gas, plus the logistics behind them, according to a statement. Saudi exports through Sidi Kerir, the Mediterranean end of the Sumed pipeline, reached around 2.3 mn bbl / d in August. Most of those barrels go to Europe and the US. For Asian buyers, sending crude around Africa adds about 25 days.

Aramco says rebuilding stocks could take two years

Aramco is working on additional crude oil export routes and more storage overseas, and rebuilding inventories could take as long as two years, CEO Amin Nasser said at the World Petroleum Council Energy Congress in Riyadh. The company’s goal is to limit supply disruptions in coordination with the Energy Ministry, Nasser said.

REMEMBER- Nasser said last month that the oil giant is studying a fourth and a fifth crude-export corridor on top of the three it already uses.

Flows are most of the way back: Middle East crude has recovered to 80-90% of pre-war levels, US Energy Secretary Chris Wright said, with average exports from the Arabian Gulf through the Strait of Hormuz and bypass-pipelines reaching 14 mn bbl / d. “Given the surplus production capacity in the world, and the large stores, that doesn’t make us comfortable but it has made a viable, reasonable price today for oil,” he said.

The strain shows up in stocks: Global onshore commercial oil inventories have fallen below 6 bn bbl, Nasser said, and much of what remains is tied up and can’t be drawn on right away, which limits how far it could cushion a longer disruption. He described the crude problem as “still there but it’s mostly handled.”

The damage to the East-West line showed the value of years of planning, investment, and maintenance, Energy Minister Prince Abdulaziz bin Salman said. He added that “investment must continue” and that resilience depends on preparing for disruptions before they happen. “Our objective is an energy system capable of performing across a range of conditions, with the flexibility to adapt as circumstances change,” he said.

What to watch: Neither the Qatar nor the Egypt MoU has routes or a timeline attached yet, so the nearer-term marker is the gas-line conversion, and whether Aramco’s dual-use setup turns a winter stopgap into permanent oil capacity.

Iraq is close to trucking its first crude through Syria, three months later than planned

Iraq is close to sending its first crude by truck through Syria, giving Baghdad an overland export route that avoids Hormuz. The agreement between the two governments is almost done, and Syrian Petroleum Company (SPC) CEO Youssef Qiblawy told Bloomberg last week that he hopes the first trucks will arrive by mid-October.

That would put the route about three months behind schedule: Iraqi officials had expected tanker-truck shipments to start in early July, at around 50k bbl / d, once new unloading areas opened at Baniyas. In early September, Somo was still negotiating with the SPCand had no crude contracts through Syria, Attaqa reported.

Iraqi fuel oil is already making the trip, and it gives a sense of the scale crude would need. More than 600k tons of Iraqi fuel oil reached Syria by road in June, and a total of 2.1 mn tonnes since April, the National reported. Around 1k trucks carry it, each hauling roughly 220 barrels, and crude would need “at least the same number,” Qiblawy said. That is roughly 220k bbl / d, a small share of Iraq’s roughly 2.7 mn bbl / d of crude exports last month.

Where the corridor breaks

Baniyas works as a transfer point: Iraqi fuel oil is unloaded from trucks at a platform connected to storage tanks north of the Baniyas refinery, then pumped onto tankers offshore for export. The cargo never goes through the refinery, so the port links Iraq’s trucking network directly to international shipping.

How much the port can store, and how fast trucks can unload, will decide how much crude gets through .Baniyas storage holds 1.5 to 2 mn barrels in old tanks that need maintenance, which by our math is seven to nine days of crude at 220k bbl / d. Queues of tanker trucks have stretched more than 30 km outside Baniyas, and border processing and truck turnaround times limit how fast cargo moves. Syrian Petroleum Co. plans to add storage for Iraqi crude, and the two countries agreed in September to link their customs systems digitally.

Iraq’s trucking route to Kirkuk shows how hard the ramp-up can be: Basra Oil Company’s first two-day pilot trucking crude to Kirkuk moved about 19k bbl / d, barely a fifth of its 100k-150k bbl / d target, held back by truck availability and loading capacity.

The bigger volumes depend on a 2 mn bbl / d pipeline

Construction of a new Iraq-Syria oil pipeline could begin in 1Q 2027, Reuters reported. The project is currently in preliminary engineering design, while preparations continue at Baniyas to receive Iraqi crude. Iraq’s Oil Ministry has agreed with a Chevron-led consortium on a USD 15 bn pipeline of up to 2 mn bbl / d. A Basra-Baniyas pipeline would take about four years to build after a final investment decision, with Chevron, UCC Holding, and TI Capital planning to lead.

SAL’s contract with Saudi Post now runs three years

SAL’s contract with Saudi Post now runs three years: SAL Saudi Logistics Services has signed a 36-month agreement with Saudi Port (SPL) to handle postal and commercial cargo shipments across the Kingdom, according to a disclosure. SAL will oversee shipments from receipt through loading, storage, and transfers between warehouses, postal facilities, and aircraft. The contract has no fixed value, with payments set by demand under agreed pricing, and SAL expects a positive financial impact from 4Q 2026. The contract is three times the term of the 12-month deal the two signed in October 2025.

It is their third agreement in a year. Between the two contracts, SAL and SPL Digital Services signed an MoU in December to build joint digital logistics solutions across SAL’s e-commerce, postal, and ground handling units.

Gulf oil exports slip back from their prewar high as attacks reach waters beyond Hormuz

Gulf crude exports fell to a seven-day average of 9.9 mn bbl / d as of 7 October as tanker attacks spread beyond Hormuz, the Financial Times (FT) reported. That’s around 42% below the prewar baseline, and down from c. 15.5 mn bbl / d in September.

The drop came just as Washington was calling the strait open: US Secretary of State Marco Rubio said at a Wednesday press conference in Athens that Tehran had “lost complete control” of the waterway, as regional oil shipments approached prewar levels, The National reported.

The numbers had backed him up until late September: The seven-day average for Gulf crude exports reached 18.3 mn bbl / d on 30 September, above the 18 mn bbl / d average for the 12 months before the war. Those figures include shipments through the Red Sea and other bypass routes as well as Hormuz.

Iran has widened its attacks beyond the narrow corridor along Oman’s Musandam peninsula, where most of the recent incidents had been concentrated. The Turkish-owned products tanker Acers was struck off northern Qatar on Wednesday, injuring crew members and starting a fire on board. Two days later, the Chinese-owned supertanker Gem No. 2 was hit near the UAE.

Ships waiting outside the strait have also come under fire: The Dhalkut reported gunfire nearby off Fujairah on Thursday, and Iran separately claimed it attacked the NV Sunshine after it crossed Hormuz, though that incident hasn’t been verified. The IRGC has warned that vessels using routes it considers unauthorized could be attacked anywhere in the region.

That puts more ground for US air cover to protect: American aircraft have been escorting tankers through the southern passage along Oman’s coast, keeping them away from waters closer to Iran. Wider attacks could raise security costs for Gulf states backing Washington and stretch US air cover over a larger area, John Walker, head of advisory at EOS Risk Group, told the FT.

Shipping costs are climbing again: The daily charter rate for a supertanker from the Gulf to China hit a record USD 1.6 mn last week, as owners demand higher premiums to enter the region and fewer vessels are available. Those costs land on a network that already relies on risk-tolerant shuttle tankers to carry crude through Hormuz before it is transferred to other vessels outside the Gulf.

BACKGROUND- Gulf exporters have spent months building a way around the shipping squeeze. Saudi Arabia and other producers have increasingly relied on ship-to-ship transfers off Oman and Fujairah, using one tanker for the high-risk Hormuz and another for the onward voyage. The growing traffic has pushed some transfers as far as India’s Gulf of Kutch, as traditional transfer locations become increasingly congested.

Calendar

12-14 October (Monday-Wednesday): The Airport Show, Dubai, UAE.

20-22 October (Tuesday-Thursday): TOC Americas, Cartagena, Colombia.

21-22 October (Wednesday-Thursday): Global Ports Forum, Singapore.

26-29 (Monday-Thursday): Air Cargo Forum, Miami, US.

27-29 October (Tuesday-Thursday): Routes World, Riyadh, Saudi Arabia.

NOVEMBER

2-5 November (Monday-Thursday): ADIPEC Maritime and Logistics Exhibition and Conference, Abu Dhabi, UAE.

10-11 November (Tuesday-Wednesday): TOC Asia, Singapore.

10-12 November (Tuesday-Thursday): Intermodal Europe, Rotterdam, Netherlands.

11-13 November (Wednesday-Friday): Logitrans, Istanbul, Turkey.

18-19 November (Wednesday-Thursday): Breakbulk Asia, Singapore.

FEBRUARY 2027

10-12 February (Wednesday-Friday): Routes Americas, San Juan, Puerto Rico.

MARCH 2027

16-18 March (Tuesday-Thursday): CMA Shipping, Houston, US.

16-18 March (Tuesday-Thursday): Routes Asia, New Delhi, India.

APRIL 2027

20-22 April (Tuesday-Thursday): Routes Europe, Antalya, Turkey.

26-29 April (Monday-Thursday): Transport Logistic and air cargo Europe, Munich, Germany.

26-29 April (Monday-Thursday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

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