Bessent: Strait of Hormuz May Lose Importance in Two Years

On September 2, during discussions at the G20 financial meetings in Asheville, North Carolina, US Treasury Secretary Scott Bessent predicted that the Strait of Hormuz could become "like a worthless piece of water" within two years. This forecast is based on the expansion of pipelines and export infrastructure by Gulf producers aimed at bypassing the strategic waterway.

Bessent noted that disruptions in shipping through the strait have exposed the vulnerabilities of Gulf oil producers reliant on it for international market access. Saudi Arabia is well-positioned to reduce its dependence on the Strait of Hormuz through its East-West Pipeline, which connects oil-producing regions in the east to Yanbu on the Red Sea coast, allowing crude oil to reach export terminals without traversing Hormuz.

The pipeline has a capacity of up to 7 million barrels per day, although not all of this is available for exports. Additionally, Riyadh is contemplating expanding its bypass infrastructure by 1 to 2 million barrels per day, indicating that recent disruptions may hasten investments in alternative routes.

However, the Red Sea route presents its own security risks.