Oil Comment: Gulf Exports: Short-Term Uncertainty, Long-Term Pipeline Hedge

Research evidence excerpt

Oil Comment: Gulf Exports: Short-Term Uncertainty, Long-Term Pipeline Hedge

Goldman Sachs Oil Comment

end-2028, which would insulate more than 60% of the 23mb/d of pre-war oil

exports by the seven Persian Gulf countries that geographically need to rely on

pipelines to de-risk exports from Hormuz disruptions6 (Exhibit 1).

o Our estimates are sensitive to our assumptions regarding the feasibility of

potential projects and construction speed.

§ In our “Accelerated Scenario”7, pipeline capacity will insulate 75% of

exports by end-2028, versus just over 45% of exports in our

“Conservative Scenario”8 (Exhibit 3).

n At the peak of the US-Iran war, we upgraded our long-dated price assumption (i.e., 3

year ahead Brent futures) by $9/bbl to $76, primarily on a higher structural security

premium. Recent attacks highlight how uncertain Gulf exports remain and that a

serious re-escalation could re-intensify the short run upside risk to oil prices.

However, the eventual expansion of pipeline capacity bypassing Hormuz poses

downside risk to this long-dated price assumption9.

Our Base Case Implies Over 14mb/d of Effective Pipeline Capacity by End-2028, Insulating

More Than 60% of the Pre-War Level of Persian Gulf Producers’ Exports From Any Potential

Closures

mb/d Oil Pipeline Capacity Bypassing Hormuz: Baseline Scenario Percent of

Pre-War Flows

25 Saudi Arabia United Arab Emirates Iraq

Pre-War Flows From Persian Gulf Countries

15 3.5 14.2

3.8 50

6.9

5 20

0 0

Latest 14 Day Incremental Change Incremental Change 2028Q4

Average By 2027Q4 In 2028 Cumulative Total

We measure current effective pipeline capacity (latest 14 day average) as the sum of flows from the ports of Yanbu (via East–

West pipeline), Fujairah (via ADCOP pipeline), and Botas Ceyhan (via Kirkuk–Ceyhan pipeline).