Kuwait eyes Saudi and UAE pipeline links to bypass the Strait of Hormuz

Kuwait is considering oil pipeline connections with Saudi Arabia and the UAE to establish export routes that bypass the Strait of Hormuz, Kuwait Petroleum Corporation’s (KPC) international marketing chief, Sheikh Khaled Al-Sabah, tells AGBI. The proposed measure is one of three strategies KPC is adopting to cushion against disruptions from the ongoing war, alongside expanding its tanker fleet and increasing overseas oil storage capacity.

In the meantime, Kuwait is rebuilding its crude export flows around Hormuz. KPC is moving around 1 mn bbl / d, using its own and chartered tankers to deliver some cargoes directly to customers while shifting others through ship-to-ship transfers outside the strait, Bloomberg quotes Al-Sabah as saying. That puts exports back near their highest level in six months after they collapsed to multiyear lows earlier in the war.

The caveat: The workaround comes with a price tag. KPC customers that want crude delivered outside the strait will have to pay more to compensate Kuwait for handling the crossing, while buyers willing to collect cargoes inside the Gulf will receive markdowns. The distinction matters while traffic remains far from normal: estimates put Hormuz flows at around 7-10 mn bbl / d of oil and products, versus roughly 20 mn bbl / d before the war.