Why is Strait of Hormuz traffic expected to peak at only 70% of its historical volume?

The projected 30% permanent reduction is due to Middle Eastern producers structurally rerouting their crude through overland pipelines to terminals outside the Persian Gulf, such as Fujairah in the UAE and Yanbu in Saudi Arabia. Having established these secure, alternative logistics pathways during recent geopolitical crises, producers are keeping them active to permanently mitigate the risk of a total maritime blockade.

How does this shift affect global oil prices and market volatility?

By permanently diversifying export routes away from a single maritime chokepoint, the global oil market becomes more resilient to localized geopolitical shocks in the Persian Gulf. While the initial transition incurs higher infrastructure and transport costs, the long-term effect should be a reduction in the sudden, extreme price spikes historically triggered by threats to the Strait of Hormuz.

Which countries stand to benefit or lose the most from this structural realignment?

The United Arab Emirates and Saudi Arabia stand to benefit by establishing themselves as safer, more reliable suppliers with direct access to open ocean ports. Conversely, Iran loses a portion of its strategic geopolitical leverage, as its ability to threaten global energy security by disrupting the Strait of Hormuz is significantly diminished.

OilPrice · June 18, 2026 (Jun 18) · 1 min read

Goldman Sachs Warns Strait of Hormuz Traffic May Never Fully Recover

Analysis

AI-assisted analysis · reviewed by Yuri Kan

Goldman Sachs' projection that Strait of Hormuz tanker traffic may permanently plateau at 70% of pre-crisis levels signals a structural realignment of global energy logistics. Middle Eastern producers are actively bypassing this volatile chokepoint by locking in alternative pipeline routes to the Red Sea and Gulf of Oman. This permanent shift in trade flows suggests that geopolitical risk premium is being hardcoded into long-term infrastructure planning, reducing Asia's absolute reliance on the narrow strait.

Key Facts

Goldman Sachs analysts warn that crude oil and product tanker traffic through the Strait of Hormuz may never fully recover to its historical baseline.
The investment bank projects that long-term oil flows through the strategic chokepoint could permanently cap at just 70% of pre-war volumes.
Middle Eastern national oil companies are actively mitigating transit risks by permanently redirecting volumes through overland pipeline alternatives.
The structural shift is driven by the prolonged Red Sea crisis and broader Middle East geopolitical instability, forcing a reassessment of maritime supply chain vulnerabilities.
The diversion of crude away from Hormuz involves utilizing pipelines terminating at ports on the Red Sea (such as Saudi Arabia's East-West Pipeline) and the Gulf of Oman (such as the Habshan–Fujairah pipeline).

Background & Context

The Strait of Hormuz has historically been the world's most critical oil transit chokepoint, traditionally carrying approximately 20% of global petroleum consumption, or roughly 20 million barrels per day. Historically, any disruption or threat of closure by Iran has sent immediate shockwaves through global energy markets, particularly affecting Asian refiners who are the primary buyers of Persian Gulf crude. Over the past decade, regional producers like Saudi Arabia and the UAE have invested billions in bypass infrastructure, but these pipelines were historically underutilized until recent geopolitical escalations forced a permanent operational pivot.

Market Impact

This structural diversion fundamentally alters the risk profile of Middle Eastern crude delivery, potentially lowering the daily geopolitical risk premium associated with Hormuz transit. However, it increases the strategic importance of alternative terminals like Fujairah and Yanbu, shifting the logistical focus of global tanker fleets. For shipowners, this means longer, more complex voyages and a permanent redistribution of tanker demand from the Persian Gulf to the Red Sea and Gulf of Oman. Furthermore, the permanent reduction in Hormuz traffic reduces Iran's geopolitical leverage over global energy markets, as a blockade of the strait would no longer paralyze a fifth of the world's oil supply.

What to Watch

In the coming quarters, market observers should monitor the utilization rates of Saudi Arabia's 5-million-barrel-per-day East-West pipeline and the UAE's Fujairah terminal to see if they sustain these elevated bypass volumes. Additionally, the pricing differentials between Persian Gulf loadings and those outside the strait will serve as a key metric for how the market values this bypassed crude. Finally, watch for potential infrastructure expansion announcements from ADNOC and Aramco as they seek to permanently codify this 30% diversion capacity.

Frequently Asked Questions

Why is Strait of Hormuz traffic expected to peak at only 70% of its historical volume?: The projected 30% permanent reduction is due to Middle Eastern producers structurally rerouting their crude through overland pipelines to terminals outside the Persian Gulf, such as Fujairah in the UAE and Yanbu in Saudi Arabia. Having established these secure, alternative logistics pathways during recent geopolitical crises, producers are keeping them active to permanently mitigate the risk of a total maritime blockade.
How does this shift affect global oil prices and market volatility?: By permanently diversifying export routes away from a single maritime chokepoint, the global oil market becomes more resilient to localized geopolitical shocks in the Persian Gulf. While the initial transition incurs higher infrastructure and transport costs, the long-term effect should be a reduction in the sudden, extreme price spikes historically triggered by threats to the Strait of Hormuz.
Which countries stand to benefit or lose the most from this structural realignment?: The United Arab Emirates and Saudi Arabia stand to benefit by establishing themselves as safer, more reliable suppliers with direct access to open ocean ports. Conversely, Iran loses a portion of its strategic geopolitical leverage, as its ability to threaten global energy security by disrupting the Strait of Hormuz is significantly diminished.

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