Senior Saudi statesman Prince Turki Al Faisal once told me that energy markets bind the world together. Coming from the man whose father, King Faisal, started the 1973 oil embargo – a near cataclysmic event at the time that saw the New York Stock Exchange shed almost half its value in a year, and ushered in a decade of high inflation, unemployment and stagnant industrial productivity worldwide – that means something.
To put today’s crisis in the Gulf in context, while the 1973 embargo removed 4.5 million barrels per day (about 7 per cent of global supply) through deliberate political cuts, the 2026 Hormuz blockade has halted upwards of 20 million bpd, representing roughly one-fifth of global petroleum consumption.
Now, according to UAE Minister of Industry and Advanced Technology Dr Sultan Al Jaber, the world is facing a shortfall of one billion barrels. That’s because the war with Iran did not just shut the Strait of Hormuz; it unleashed a wave of economic terrorism targeting the lifeline of the global economy.
With nearly 20 per cent of global oil and LNG historically moving through Hormuz, the shock has propagated into jet fuel, petrochemicals and food, pushing freight costs up more than 40 per cent and delaying shipments by up to 15 days.
But the closure of vital sea lanes that were, just months ago, crucial arteries of global commerce, has also triggered a rethink of how to get the world’s most vital products to market, unleashing a massive reorganisation of energy and trade routes that could fundamentally remake the economic map of the Middle East.
Since late February, when co-ordinated US-Israeli strikes on Iran triggered Tehran’s closure of the strait and a collapse in Gulf tanker traffic, Gulf states, Iraq, Jordan, Syria and Egypt have accelerated a decade of stalled pipeline and logistics deals.
The result is a realignment of supply chains that sidesteps much of the existing infrastructure, opening-up overland corridors that could see Gulf governments forge new, critical economic partnerships with their neighbours. If it holds, the region will emerge less dependent on Hormuz’s narrow chokepoint and more integrated.
The blockade meant to punish the world and permanently cripple the Gulf has instead triggered the creation of a Levant-Gulf axis that treats pipelines and road networks as strategic assets.
The UAE and Saudi Arabia are leading the overland pivot. The UAE is accelerating the expansion of a new, 360km pipeline to Fujairah, expected to come online in 2027.
Saudi Aramco is leaning on its East-West pipeline to Yanbu on the Red Sea. Traffic at Gulf of Oman ports surged from 100 trucks per day before the conflict to 7,000 trucks per day, according to The Wall Street Journal.
These routes cannot replace maritime shipping capacity, but they absorb shocks and keep core flows moving. The UAE and Saudi Arabia have also tied their export strategy to regional logistics integration, with Iraq, Jordan and Egypt now treated as extensions of Gulf export capacity rather than separate markets.
Egypt and Syria have moved quickly to lock in energy co-operation. In January, Cairo and Damascus signed two memoranda of understanding to supply Egyptian natural gas to Syria for electricity generation and to provide petroleum products for Syria’s needs. The deal is framed as technical support to rebuild Syria’s battered energy infrastructure, but it also positions Egypt as a key supplier into a Levant corridor that bypasses Hormuz entirely.
The Arab Gas Pipeline, which already runs from Egypt through Jordan to Syria and beyond, is being re-evaluated for expanded throughput. Plans that once projected 10 billion cubic metres per year of capacity to Jordan, Syria, Lebanon and, eventually, Turkey are back on the table as Gulf and Levant states look for gas routes insulated from maritime risk.
Syria itself is being recast as a transit state, a land bridge for Gulf oil and gas to the Mediterranean, cutting transit time and risk for buyers in Europe and the eastern Mediterranean. The interim government has promoted a “Four Seas” project and a “4+1” plan to link the Gulf, Iraq, Turkey and the Mediterranean through Syrian territory. In May, TotalEnergies, QatarEnergy and ConocoPhillips signed a memorandum with the Syrian Petroleum Company to review an offshore site near Latakia, the first such deal since 2011. Chevron has selected a site for Syria’s first deep-water oil and gas project, with operations starting this summer. Before the civil war, Syria exported 380,000 bpd in 2010.
Jordan sits at the centre of the new corridor. The kingdom is pressing ahead with a 300km oil pipeline from its Zarqa refinery to the Iraqi border and is expanding its role as a gas transit hub through the Arab Mashreq pipeline from Egypt’s Aqaba terminal. Jordan’s goal is to secure stable crude and gas supplies while offering Gulf producers a secure route to the Red Sea and Mediterranean. For Iraq, the corridor means Mediterranean access without relying on Turkey alone. For Egypt, it means monetising gas reserves.
Iraq, meanwhile, is reviving the Kirkuk-Ceyhan pipeline through Turkey as its primary Mediterranean outlet, while discussions on the Basra-Aqaba pipeline via Jordan have regained urgency. Baghdad is also integrating energy and logistics planning with Red Sea and Mediterranean trade systems to protect crude exports, stabilise state revenue and secure aviation fuel. The logic is simple: reduce dependence on Gulf tanker routes and anchor export continuity to Mediterranean and Red Sea corridors that Iran cannot close.
The numbers show why this matters beyond the region. The International Energy Agency forecasts a supply deficit of 1.78 million bpd in 2026, a reversal from a 410,000 bpd surplus projected just a month earlier. Global crude runs are expected to plunge by 1.6 million bpd to 82.3 million bpd as refineries face feedstock shortages.
In this environment, every barrel that moves overland from Basra to Aqaba, from Kirkuk to Ceyhan, or from Egyptian fields to Syrian power plants reduces pressure on a maritime system that is still considered too risky for routine transit.
This is not a temporary fix; freight markets have adjusted, and analysts say pre-conflict patterns will not fully return even if Hormuz reopens. War-risk insurance surcharges of $75-160 per cubic metre, a 40 per cent drop in Asia-Europe airfreight capacity, and insurance premiums of 0.5 per cent to 1.5 per cent of cargo value have made overland routes structurally competitive. The Middle East is reorganising around them.
