Navigating the Hormuz dilemma

THE US war on Iran has exposed the fundamental strategic vulnerability of the Arab Gulf states. The double blockade of the Strait of Hormuz by Iran and the US has significantly affected the oil and gas exports of the GCC states. The impact has varied from state to state. Qatar, Bahrain and Kuwait have been the most affected GCC countries due to their overwhelming dependence on Hormuz for exports. Saudi Arabia and the UAE have managed to partially mitigate the disruption by diverting some oil flows through Yanbu and Fujairah, respectively, yet these alternatives possess limited capacities and are not a complete substitute for the Hormuz route. Even if the conflict is over and the oil supplies resume, the GCC countries cannot guarantee uninterrupted oil supplies to international partners during another crisis in the future. This is mainly because the Strait of Hormuz proved to be a central pillar of Tehran’s deterrence strategy against the US during the recent conflict. It is highly likely that Tehran will continue to use Hormuz as a deterrent during any future external aggression. Hence, uncertainty over the future of Hormuz will continue to haunt the Arab Gulf countries’ strategic thinking. This emerging challenge may be termed as the ‘Hormuz dilemma’. Energy-exporting Arab Gulf states as well as Asian importing nations are considering various strategies to overcome Hormuz dilemma. This includes considerations of expanding capacities of national strategic oil reserves, and finding alternative markets and supply routes. The Hormuz dilemma has provided Islamabad a strategic opportunity to pitch the idea of ‘renting oil and gas storage facilities’ to the Arab Gulf states. The principal objective of establishing strategic oil and gas storage facilities of the Arab Gulf countries in Pakistan would be to ensure that buyers can receive acceptable substitutes of already stored Qatari LNG, Emirati oil, Bahraini petroleum products and, potentially, Saudi crude from facilities