Trump's Proposed 20% Hormuz Fee Spurs Gulf Push for Alternative Oil Export Routes

Gulf oil producers are stepping up efforts to ship crude without relying on the Strait of Hormuz after Donald Trump floated the idea of a 20% fee on goods moved through the chokepoint, according to CoinDesk. The proposal comes as U.S.-Iran tensions again underscore how exposed the world's key energy corridor remains. The UAE and Saudi Arabia are leaning more heavily on infrastructure outside the strait to keep exports moving. In the UAE, Fujairah on the east coast is drawing fresh attention as officials explore building a new port and container terminal there to reduce dependence on Dubai's Jebel Ali, the reports said. The Financial Times, citing people familiar with the matter, said DP World is in talks related to the project; the company declined to comment when contacted by CNBC. Ahmed bin Sulayem, CEO of the Dubai Multi Commodities Centre, described the buildout of ports and terminals outside the strait as both a near-term response and a medium- to long-term shift, adding that shipping lines may stay cautious about Hormuz until security conditions improve. Analysts also say the UAE has been using tankers to move crude from inside the strait to waters outside, where it can be transferred onto larger vessels for delivery to Asian markets. Saudi Arabia is redirecting more flows toward the Red Sea. The kingdom's east-west Petroline pipeline runs about 750 miles from Abqaiq to the Red Sea port of Yanbu and has a post-expansion design capacity of roughly 7 million barrels per day. Data cited from Lipow indicate Saudi Arabia is currently diverting about 4 million barrels per day onto the route, with cargoes then shipped overseas from Yanbu via the Red Sea. Rapidan Energy Group President Bob McNally said the ability to shift additional volumes this way is a constructive element in recent supply adjustments. Analysts note that the Gulf states with practical options to bypass Hormuz are mainly Saudi Arabia and the UAE. Even so, rerouting does not remove geopolitical risk—it relocates it. Tankers loading at Yanbu must still cross the Red Sea and transit the Bab el-Mandeb Strait, where markets fear Houthi attacks from Yemen could endanger another critical maritime artery. The International Energy Agency estimates that only Saudi Arabia and the UAE currently have operating crude pipelines capable of bypassing the Strait of Hormuz, with available spare capacity of about 3.5 million to 5.5 million barrels per day. Most exports from Iraq, Kuwait, Qatar, Bahrain and Iran still depend heavily on Hormuz. Analysts warn that if disruptions persist and empty tankers cannot reach export terminals smoothly, Saudi Arabia, Kuwait and Iraq may ultimately have to unwind their recent production increases. Adam Posen, president of the Peterson Institute for International Economics, said it could take another 18 to 24 months to put in place enough alternative pipelines, shipping lanes and other export solutions.