Oil and product pipelines: Geopolitics and regulation

Bypass lifelines, Druzhba as a weapon and drone strikes

With Hormuz largely shut in 2026, Gulf bypass lines became lifelines and then targets. Druzhba became a political weapon in Europe; in North America the arguments are about permits and tolls.

Tailwinds

Hormuz flows fell from about 20 to 2.7 million b/d (March to May average). Saudi exports from Yanbu rose from about 2 to over 5 million b/d by early June; the UAE line to Fujairah can carry about 1.8 million b/d.¹⁰

The UAE's Jebel Dhanna to Fujairah line adds about 1.5 million b/d by 2027 to about 4.7 million b/d of pre-war Saudi and UAE bypass capacity.⁹

Ottawa named the proposed 1 million b/d West Coast Oil Pipeline (Alberta to near Delta, BC) a project of national interest on 1 October, with Trans Mountain and Pembina among the owners and at least 10% offered to Indigenous communities.¹³

FERC set the US oil pipeline index at PPI-FG minus 0.55% for July 2026 to June 2031; Canada's regulator approved a Trans Mountain toll settlement.⁶²¹

Headwinds

Strikes on a pumping station cut flow by 700,000 b/d until full 7 million b/d was restored on 12 April. Drones from Iraq halted the line on 10 September; it was back to 5.8 million b/d by 6 October.¹¹¹⁸²³

A Russian strike at Brody, Ukraine, on 27 January stopped flows to Hungary and Slovakia until 23 April. Hungary blocked a EUR 90 billion EU loan to Ukraine meanwhile; MOL bought tanker crude via Croatia's Adria line.^12192022

Trans Mountain's expansion cost about C$34 billion; its fixed toll rose to C$10.88 per barrel from C$5.76 expected in 2017.⁷⁸

Nigeria lost 36.69 million barrels of crude in 2022, much of it to pipeline theft, and 7.68 million in 2023.¹⁴

Nigeria lost 36.69 million barrels of crude in 2022, much of it to theft, and 7.68 million in 2023.¹⁷

A bypass pipeline only moves the chokepoint: Saudi oil piped to Yanbu still passes Bab el-Mandeb, and Houthi attacks helped cut East-West flows to about 2 million b/d in August 2026 (Kpler data, reported by Al Jazeera).

Sources

1. FERC adopts PPI-FG minus 0.55% oil pipeline index for 2026-2031 Vinson & Elkins, 2026
2. CER sets interim tolls for the expanded Trans Mountain pipeline system Canada Energy Regulator, 2023
3. TMX latest cost estimate: C$34 billion (analyst note) RBN Energy, 2024
4. World Oil Transit Chokepoints (last updated 3 March 2026) US EIA, 2026
5. How global oil supplies have readjusted to help fill the huge gap left by the Strait of Hormuz shock IEA, 2026
6. Saudi Arabia restores key pipeline to half its capacity (Bloomberg) Rigzone, 2026
7. Oil flow to Slovakia and Hungary halts after Druzhba damage Bloomberg, 2026
8. West Coast Oil Pipeline: project of national interest Government of Canada, Major Projects Office, 2026
9. NEITI oil and gas industry report 2022-2023: presentation of final report (25 September 2024) NEITI / EITI, 2024
10. Amid rising geopolitical strains, oil markets face new uncertainties (Oil 2025 launch) IEA, 2025
11. Saudi Arabia says East-West pipeline pumping 5.8 million bpd Al Jazeera, 2026
12. MOL secures tanker crude, boosts Adriatic pipeline flows as Druzhba outage persists (Reuters) Pipeline and Gas Journal, 2026
13. Russian oil to Slovakia resumes flowing through pipeline that crosses Ukraine (AP) ABC News, 2026
14. CER approves Trans Mountain settlement, establishing a new framework for tolls Canada Energy Regulator, 2026
15. Transit to Hungary and Slovakia: Russia strikes Druzhba oil pipeline for first time (Brody, 27 January) Ukrainska Pravda, 2026
16. Saudi Arabia says key oil pipeline back to full capacity after attacks Al Jazeera, 2026