Saudi's Potential Pipeline Plan

Saudi Arabia is exploring a 2 million bbl/day pipeline expansion to bypass the Strait of Hormuz. While J.P. Morgan views this as a positive start, it falls short of the 14 million bbl/day capacity required to remove reliance on the Strait.

Key Takeaways

• 1.Saudi Arabia is considering a 2 million bbl/day expansion of its East-West pipeline to reduce dependency on the Strait of Hormuz.
• 2.The 2 million bbl/day plan is insufficient to achieve zero reliance on the Strait of Hormuz, which requires an estimated 14 million bbl/day capacity.
• 3.J.P. Morgan maintains an overweight (OW) rating on MENA ports and pipeline infrastructure.

Table of Contents

• Saudi's potential 2m bbl pipeline plan is a good start
• What would the neighbors say? Yes!
• Costs: $50-55 bn for Saudi to do 7 m bbl/day.

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