Gulf Energy Crisis Forces Multi-Billion Dollar Pipeline Pivot as Hormuz Closure Enters Eighth Month

Saudi Arabia announced on October 12 that it aims to expand oil pipeline capacity bypassing the Strait of Hormuz to 10 million barrels per day within two to three years, with up to 1.2 million barrels per day potentially available within seven to eight weeks by repurposing a domestic gas pipeline. Energy Minister Prince Abdulaziz bin Salman told the World Petroleum Congress in Riyadh that the kingdom could add up to 3 million barrels per day through further investment in this conversion, supplementing the East-West pipeline that was carrying 5.8 million barrels per day as of October 6 following repairs after a September drone attack.

The announcement came as commercial shipping through Hormuz remained effectively paralyzed on Day 228 of the crisis, with only six ships crossing on October 12 and a seven-day average of 8.6 transits per day—roughly 10 percent of the pre-crisis baseline of 84.8 daily transits. Iran's Islamic Revolutionary Guard Corps claimed on October 12 to have struck three tankers in the strait over the preceding 48 hours, warning that vessels cooperating with US forces or violating Iranian routing rules would face decisive responses anywhere in the region, not only within the strait itself.

WTI crude settled at $93.74 per barrel on October 12, up 2.0 percent, while Brent crude reached $106.65, up 1.8 percent, following weekend Houthi attacks on Riyadh's international airport that killed 12 people and wounded more than 300 on October 10. UAE Presidential Adviser Anwar Gargash called on October 12 for renewed Gulf security cooperation, warning that attacks on Saudi Arabia undermine the security of every Gulf state and acknowledging serious shortcomings in collective defense that had encouraged aggressors to target the region.

US Secretary of State Marco Rubio and UK Foreign Secretary Ed Miliband reaffirmed their commitment to safeguarding Hormuz transit and holding Iran accountable during an October 12 telephone call, though the State Department readout announced no new restrictions, naval deployments, or operational arrangements. Iran's Foreign Minister Abbas Araghchi offered the same day to mediate between Saudi Arabia and the Houthis, stating Iran was ready to provide assistance to initiate dialogue, though Riyadh did not publicly respond to the offer and the credibility of Tehran mediating a conflict involving a group widely described as its proxy remains uncertain.

The energy crisis is compounding global supply-chain stress already at four-year highs. Roughly 12 percent of global container ship capacity is currently absorbed by port congestion, the highest level in four years, according to C.H. Robinson's October Edge Report. Asian port congestion, worsened by repeated typhoons, is tying up about 8.5 percent of the global containership fleet and could take seven to 10 months to return to June 2025 levels, with maritime analyst Sam Chambers warning the disruption increasingly looks like one that could persist well into 2027.

The US Energy Information Administration estimated on October 6 that global oil inventories fell by an average of 1.9 million barrels per day in the third quarter of 2026 and will fall an additional 0.7 million barrels per day on average in the fourth quarter. Saudi Arabia's 10 million barrels per day pipeline target would represent roughly one-third of the kingdom's total production capacity and nearly double the East-West pipeline's current stated capacity of 7 million barrels per day, but the constraint is whether expansion can be completed before cumulative Hormuz disruptions force sustained global supply reductions.

UAE airlines including Emirates, Etihad, flydubai, and Air Arabia cancelled flights to Riyadh and other Saudi cities through October 14 because of regional disruption. Operations at Riyadh's King Khalid International Airport remained suspended until at least October 17 following the October 10 Houthi strike. Pakistan pledged on October 12 to provide full military backing to Saudi Arabia under the Mecca Joint Defense Agreement, while the Saudi-led coalition intercepted further ballistic missiles targeting Riyadh and Khamis Mushait the same day.

This analysis covers October 12 through October 13, 2026, based on 29 source records documenting events on those two dates only. The reporting window captures the immediate Saudi pipeline announcement and overlapping diplomatic and military developments but does not include a full week of coverage. Whether Saudi Arabia can secure the capital, technology partnerships, and construction timelines required for the multi-year pipeline expansion, whether Gulf states can agree on collective security arrangements that have eluded them throughout the crisis, and whether the US-UK commitment to Hormuz transit translates into enforcement action or remains declaratory all remain unresolved and will determine the trajectory of the Gulf energy and security crisis in coming months.

Sources

bloomberg.com cnbc.com argusenglish.in ianslive.in gvwire.com gulfnews.com dredgewire.com middleeasteye.net