24/08/2026 03:42 AST
Saudi Arabia is leveraging its Red Sea infrastructure to advance its logistics ambitions, with a potential expansion of the East-West Crude Oil Pipeline, or Petroline, highlighting the growing convergence of energy security.
The nearly 1,200 km Petroline is increasingly viewed as more than an energy asset.
By connecting oil fields in the Kingdom's Eastern Province to the Red Sea port of Yanbu, it complements Saudi Arabia's broader investments in ports, industrial cities, and logistics zones, strengthening supply chain resilience while supporting Vision 2030's ambition to position the Kingdom as a global logistics hub.
Reuters has reported that Saudi Arabia is considering expanding Petroline by up to 2 million barrels per day, enabling the Kingdom - and potentially neighboring Gulf states - to export more crude without transiting the Strait of Hormuz.
The pipeline's strategic role has already been evident this year.
In its first-quarter results, released in May, Aramco said the Petroline had been sharply ramped up to its maximum capacity of 7 million bpd, supporting crude exports via Saudi Arabia's west coast during disruptions affecting Gulf shipping.
If approved, the expansion would reflect Riyadh's efforts to align strategic energy infrastructure with its broader trade and logistics ambitions.
Beyond increasing export capacity, it would enhance Saudi Arabia's ability to serve international markets through multiple export routes while reducing exposure to geopolitical disruptions in the Gulf.
Originally built during the 1980s Tanker War - a phase of the Iran-Iraq War in which oil tankers and commercial shipping in the Gulf was targeted - Petroline was designed to provide Saudi Arabia with an export route that bypasses the Strait of Hormuz.
Today, the pipeline links the Kingdom's eastern oil fields with the Red Sea port of Yanbu, complementing broader investments in ports, industrial cities and logistics zones while strengthening the resilience of both energy exports and trade.
Aramco President and CEO Amin H. Nasser reinforced the pipeline's strategic importance during the company's 2026 first-half earnings press conference on Aug. 4, saying the company maintained business continuity during disruptions in the Strait of Hormuz by relying on its "diverse asset base and multi-decade planning, including strategic infrastructure such as the East-West Pipeline, storage capacity, and export terminals."
Nasser said those assets enabled Aramco "to sustain production and exports while advancing key projects, despite the challenging regional environment."
Petroline expansion and energy security
For energy economist Carole Nakhle, CEO of Crystol Energy, the proposed expansion is less about increasing export volumes than enhancing Saudi Arabia's strategic resilience.
"The proposed expansion is about much more than increasing export capacity. It is an investment in strategic flexibility," she told Arab News.
She added that the pipeline gives Saudi Arabia "an alternative export route that bypasses the Strait of Hormuz, allowing it to diversify export options rather than relying on a single maritime chokepoint," and that it also strengthens the Kingdom's reputation as a reliable supplier.
She further noted that "spare production capacity has limited value if the barrels cannot reach the customer."
Nakhle, who is also the secretary general of the Arab Energy Club, said additional pipeline capacity would reassure markets that a larger share of Saudi exports could continue reaching customers even if traditional shipping routes were disrupted, helping to moderate risk premiums and market anxiety.
"An expansion would certainly strengthen market confidence, particularly during periods of geopolitical tension, but we should avoid overstating its impact," she said.
She added that any expansion would not eliminate concerns about supply disruptions, nor would it replace all exports that normally transit the Strait of Hormuz, stressing that "diversification reduces risk but does not eliminate it."
Looking further ahead, Nakhle argued that the project's long-term value will depend on evolving market fundamentals as much as engineering capacity.
"Additional pipeline capacity does not in itself guarantee higher exports; global demand, competition from other producers and OPEC+ policy will continue to shape Saudi Arabia's export volumes," she said.
Nakhle added that Saudi Arabia is better positioned than many producers to navigate a more competitive market, noting that its combination of low production costs, significant spare capacity, and greater flexibility in how it delivers crude gives it an important advantage.
She concluded that over the next decade, competitiveness will depend not only on the ability to produce oil, but also on "the ability to deliver it reliably and efficiently under changing market and geopolitical conditions."
Petroline fuels Vision 2030 ambitions
Yaseen Ghulam, associate professor of economics and director of research at the Riyadh-based Al-Yamamah University, believes Petroline's strategic importance extends well beyond the oil sector, providing long-term economic resilience that supports the Kingdom's broader transformation agenda.
"Petroline, for Saudi Arabia, is more than just an oil pipeline. It is a significant economic asset that can help the country adapt to the evolving global energy market," he told Arab News.
He added that while the energy transition will gradually change demand, oil is expected to remain a vital part of the global energy mix for decades to come, particularly in Asia and Africa, emphasizing that Petroline's expansion enhances export flexibility while reducing geopolitical risks.
"This approach also mitigates the risk of encountering political challenges in the Strait of Hormuz. This contributes to the Kingdom's reputation as a reliable supplier. These advantages are very valuable for the economy and society," he said.
Ghulam added that in today's environment, resilience and reliability are, in fact, important sources of long-term economic return, along with direct financial revenues.
The associate professor also rejected the notion that continued investment in hydrocarbons conflicts with Saudi Arabia's economic diversification plans, arguing that the belief that hydrocarbons investment hinders diversification is a misconception, stressing that "the two strategies are in fact mutually reinforcing."
He stressed that oil revenues are and will continue to finance much of Saudi Arabia's transformation under Vision 2030, making reliable export infrastructure a strategic necessity.
Ghulam added: "A Petroline expansion would safeguard revenues by enhancing export security and operational flexibility, ensuring greater certainty for long-term public investment."
He said the Kingdom's fiscal space and related international credit rating also depend on the assurance of oil revenues, alongside other factors.
"More importantly, a robust energy infrastructure is key to fostering investment in technology, tourism, manufacturing, education, and renewable energy. Crucially, instead of postponing diversification, it provides the financial stability required to expedite it while preserving the Kingdom's broader competitive standing and leadership role in global energy markets," the academic said.
Regional pipeline boosts Gulf integration
Beyond Saudi Arabia, Ghulam said a regional pipeline network involving Gulf neighbors could strengthen economic integration while reinforcing the region's role in global energy markets.
"Shared export infrastructure would more likely improve regional energy security, mitigate transport risks, and improve the GCC's collective position as a reliable supplier to global markets," he said, adding that it has the potential to stimulate increased cross-border investment, logistics development, and industrial cooperation, resulting in benefits that extend beyond the energy sector.
He cautioned that the main challenges facing a potential regional pipeline project would likely be commercial in nature, including the establishment of governance arrangements, the allocation of investment responsibilities, and the definition of transit terms, as well as the creation of revenue-sharing mechanisms.
"If these issues are addressed through a transparent regional framework, as is more likely they will, given the historic cooperation spanning over many decades, the project could in fact serve as both an economic and strategic milestone for Gulf cooperation," Ghulam said.
Arab News
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