Trump’s 20% Hormuz toll spurs UAE and Saudi Arabia to fast‑track alternative oil routes

The United States’ latest threat to slap a 20 % toll on every cargo ship that transits the Strait of Hormuz has sent ripples through the Gulf’s oil market. Saudi Arabia and the United Arab Emirates are accelerating plans for new ports, pipelines and terminals that can bypass the chokepoint entirely. With attacks on tankers and the looming fee threatening to raise export costs, regional producers are scrambling to secure alternative routes. The shift could reshape global oil flows and test the resilience of existing logistics hubs. Observers warn that the speed of these projects will determine whether the Gulf can maintain its role as the world’s leading oil supplier.

What happened

U.S. President Donald Trump announced a proposed 20 % fee on any cargo that passes through the Strait of Hormuz, reigniting concerns about the chokepoint’s vulnerability. The announcement has prompted the United Arab Emirates to accelerate plans for a new port and container terminal in Fujairah, with DP World reportedly in talks to develop the site as an alternative to Dubai’s Jebel Ali hub.

Saudi Arabia is already diverting roughly 4 million barrels a day through its 750‑mile East‑West pipeline, a network that can handle up to 7 million barrels per day after recent expansions, to ship crude to the Red Sea port of Yanbu.

Why it matters

By reducing reliance on Hormuz, Gulf producers can shield revenue from geopolitical shocks and potential toll costs, while offering shippers a more predictable route. However, the massive capital outlay and the time required to bring new infrastructure online could strain regional budgets and delay the benefits. The shift also has ripple effects for global oil pricing, as any reduction in Hormuz traffic can tighten supply and influence market sentiment.

How to think about it

Investors should monitor the progress of the Fujairah port and the utilization rates of the East‑West pipeline, as both will signal how quickly the Gulf can offset Hormuz‑related risks. Policymakers need to weigh short‑term security gains against long‑term fiscal commitments, ensuring that alternative routes complement rather than replace existing logistics. Shippers can negotiate contracts that account for potential tolls while exploring diversified routing options to maintain supply continuity.

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