New commercial routes in the Middle East: the strategic alternative to the Strait of Hormuz

The disruption of the world's most important maritime strait, the Strait of Hormuz, is driving an increase in support for new land-based commercial and energy corridors connecting the Gulf to the Mediterranean. Middle Eastern governments are accelerating investments in new infrastructure, streamlining customs and regulatory processes, and exploring new railway and pipeline projects to reduce dependence on the Strait of Hormuz.

The strategic and economic potential of these corridors goes beyond Hormuz: new cross-border corridors could strengthen cooperation in a region that continues to suffer from low economic integration and high political fragmentation. They could also provide much-needed economic opportunities for places like Jordan and Syria, strengthen Syria's integration into the region at a critical time, and establish new regional hubs in an evolving trade landscape.

Realizing the potential of these projects requires close coordination among multiple countries: the efficiency of land trade depends on an entire ecosystem of connectivity that leverages digital customs integration, digital payment systems, and the mitigation of non-tariff barriers. Ensuring that trade corridors fuel economic growth and integration within the Middle East, rather than serving solely as a transit point for trade between Europe and Asia, requires coordinated industrial efforts. Furthermore, governments must signal their clear and enduring political support to mobilize private sector investments in these alternative corridors: large infrastructure projects can take a generation to generate returns, and the private sector is cautious about investing in projects that traverse difficult political and security environments and rely on land routes that are largely seen as backup solutions to maritime routes.

The emerging landscape of new Middle Eastern corridors

A set of projects is providing the building blocks for more efficient land trade in the Middle East: Saudi Arabia is upgrading the NEOM Port as a new logistics hub, expanding railway networks both to the Red Sea and to Jordan, and establishing a series of new logistics corridors. Saudi Arabia and Turkey are also exploring efforts to revive a railway connecting Jordan to Syria, which could complement emerging World Bank support for Syrian railway development and Emirati investments in Syrian ports, opening new access points to the Mediterranean. Additionally, the United Arab Emirates (UAE) and Oman are completing a new railway line that will improve the potential of Oman's ports, which lie outside both the Strait of Hormuz and the Bab al-Mandab, the two Middle Eastern maritime chokepoints.

In some cases, there are structures in place to ensure a baseline level of technical and regulatory alignment among these various projects: the railway project between Oman and the UAE is part of the GCC railway project that aims to connect all six Gulf Cooperation Council (GCC) countries, building on the broader GCC trade coordination effort. The new railway line connecting Saudi Arabia to the Jordanian border has also been a key element of the IMEC initiative announced during the Group of Twenty (G20) summit in 2023. While the war in Gaza has hindered IMEC's momentum, most signatory governments continue to coordinate through a sherpa process that has the potential to ensure alignment among corridor projects.

The urgency of the energy crisis created by the war in Iran has left countries searching for new pipeline routes that bypass Hormuz. The UAE is building a new pipeline that will double its capacity to export oil outside the strait. There are also initial discussions about a proposal for a pipeline connecting Iraq to Jordan's port of Aqaba and other projects that could provide Kuwait, Qatar, and Bahrain with alternatives for oil and gas exports. While the UAE pipeline, which does not require crossing borders and benefits from the UAE's broad access to capital, is progressing rapidly, other projects face significant financial and political obstacles. The Middle East is already littered with abandoned pipeline skeletons like the Trans-Arabian Pipeline. Both governments and the private sector are cautious about projects that could be disrupted by insecurity, cross-border disputes, or diminished economic viability.

The uncertainty about the future of the Strait of Hormuz looms over all these projects: if the strait were to return to its pre-war state in the coming months or years, some of these pipelines would become obsolete as oil and gas exports return to more flexible and cost-effective maritime routes. However, Iran's insistence on maintaining control over Hormuz and tensions between Iran and the United States suggest that demand for alternative routes will remain high.

The challenges of security and political stability

One of the biggest obstacles to the development of corridors is political instability and security in the region. Projects like the railway between Oman and the United Arab Emirates, although promising, must face the risk of disruptions due to conflicts or regional tensions. The security of critical infrastructure, such as gas pipelines and railways, is an absolute priority to attract private investment.

Furthermore, geopolitical variability could influence the longevity of these projects. For example, if the Strait of Hormuz were to return to normal conditions, some alternative corridors could lose their economic relevance. However, the persistent insecurity in the Red Sea and the tensions between Iran and the United States suggest that the demand for alternative routes will remain high.

The importance of a multilateral approach

The creation of a network of corridors, rather than a single route, is essential to ensure flexibility and resilience. As highlighted by the Atlantic Council report, the integration of routes through Oman, Egypt, and Syria could absorb a significant portion of the container traffic currently diverted from Hormuz. This diversified approach would reduce dependence on a single transit route, distributing risks across multiple paths.

An IMEC ministerial, which should bring together key regional and international players, could be a key opportunity to reaffirm political commitment to these projects. The participation of countries such as Saudi Arabia, the United States, and the EU would be crucial to ensuring the stability and continuity of the initiative.

The potential for a digital corridor in the Middle East

In addition to commercial and energy corridors, there is the possibility of developing a digital corridor in the Middle East. This project could leverage existing infrastructure to improve digital connectivity, facilitating services such as e-commerce, telemedicine, and online education. Such a corridor could also attract investments in data centers and advanced telecommunications networks, further strengthening regional economic integration.

However, the realization of a digital corridor would require close collaboration between governments, technology companies, and research institutions. Data protection and cybersecurity would be fundamental aspects to address, especially in a complex geopolitical context.

Toward a more connected future

The new commercial and energy corridors in the Middle East represent a unique opportunity to strengthen economic integration and regional stability. However, their success will depend on the ability to overcome technological, security, and political challenges. With a coordinated approach and a long-term vision, the Middle East could become a model of resilient and sustainable connectivity.