US Treasury Secretary Scott Bessent stated on August 8 that the Strait of Hormuz, through which approximately 20% of global oil and gas pass, will lose 50 to 70% of its energy traffic to underground pipelines within two years. Saudi Arabia is accelerating construction of a Red Sea pipeline to bypass the strategic chokepoint, while the UAE is expanding capacity at its Fujairah terminal located outside the strait. Rising US-Iran hostilities in 2026, combined with sanctions and military actions, have already significantly impacted shipping through the strait. This transition would reduce the Hormuz risk premium in global oil prices and eliminate a major geopolitical leverage point for Iran.
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