Energy & Resource | July 2026 | 4 min read
Quick Takeaways
- Gulf states have raised around $112 billion in bonds so far this year.
- The funds support pipelines, ports and corridors that reduce Hormuz dependence.
- Markaz data shows GCC bond and sukuk issuance reached $102.69 billion in H1 2026.
- Goldman Sachs estimates bypass capacity could reach 7.3 million bpd by end-2028.
- The new routes may reduce oil risk, but LNG and security challenges remain.
| $112bn
Record bond sales |
15m bpd
Hormuz oil flow |
60%
Possible bypass share |
Gulf governments are turning to bond markets to finance a new generation of pipelines, ports and transport corridors designed to reduce their dependence on the Strait of Hormuz after the Iran conflict exposed the risks of relying on one narrow energy route.
Gulf Borrowing Rises as Hormuz Risk Grows
Gulf countries have raised a record $112 billion in bonds so far this year as Saudi Arabia, the United Arab Emirates, Kuwait and Qatar increase borrowing for infrastructure that can move energy and trade around the Strait of Hormuz. The issuance covers the period from January 1 to July 23 and reflects both heavy state funding needs and strong investor demand.
The Strait of Hormuz remains one of the world’s most important energy corridors. Before the recent conflict, it handled around 15 million barrels of oil per day, making it a critical route for crude moving from the Gulf to global markets. The latest borrowing push shows that regional governments want alternative routes before the next major disruption.
Bond Markets Keep Funding Gulf Plans
Bloomberg data shows Gulf bond sales have more than tripled since 2022, even as geopolitical risk has increased. Separate data from Markaz shows the Gulf Cooperation Council raised $102.69 billion through bond and sukuk issuances during the first half of 2026, with Saudi Arabia accounting for nearly half of the market after issuing $49.34 billion.
| Funding marker | Value | Period or note |
| Record Gulf bond sales | $112 billion | January 1 to July 23 |
| GCC bond and sukuk issuance | $102.69 billion | First half of 2026 |
| Saudi issuance | $49.34 billion | Nearly half of GCC H1 market |
| Kuwait bond sale | $6 billion | $14.8 billion in orders |
Investor appetite has remained strong. Kuwait recently raised $6 billion and attracted $14.8 billion in investor orders, while Saudi Arabia, Abu Dhabi, Qatar and Bahrain have also completed successful debt sales. The region’s foreign exchange reserves and investment-grade credit ratings are expected to support further borrowing for long-term energy security and trade infrastructure.
New Routes Aim to Move Oil Around Hormuz
The infrastructure push includes new export terminals on the Red Sea and the Gulf of Oman, expanded oil pipelines, rehabilitation of ageing energy infrastructure and upgraded road networks. Saudi Arabia is reviving and expanding routes to its Yanbu Red Sea port, while the UAE is accelerating a $3 billion pipeline to Fujairah that would increase oil exports outside the Strait of Hormuz.
Iraq is also pursuing new pipeline links to Turkey, Syria and Jordan to diversify export routes. These projects are designed to create more options for crude exports, reduce chokepoint exposure and reassure customers that Gulf energy supplies can continue moving even if Hormuz faces renewed disruption.
Bypass Capacity Could Grow Quickly
According to Goldman Sachs estimates cited in regional and international reporting, the new projects could add 3.8 million barrels per day of bypass capacity by the end of 2027 and 7.3 million barrels per day by the end of 2028. That would allow roughly 60 percent of the Gulf’s prewar oil exports to avoid the Strait of Hormuz if required.
| Target date | Capacity | Meaning |
| End-2027 | 3.8 million bpd | New bypass capacity |
| End-2028 | 7.3 million bpd | Cumulative added capacity |
| Potential coverage | Around 60% | Share of prewar Gulf oil exports that could bypass Hormuz |
The numbers show why governments are willing to spend heavily. A wider network of ports and pipelines would not remove all energy security risks, but it would reduce the pressure on one shipping lane. It could also give producers more flexibility to route exports toward the Red Sea, the Gulf of Oman or Mediterranean-linked corridors.
Cost and Security Risks Remain
The strategy still carries trade-offs. Routes away from Hormuz may add shipping time and cost, especially for Asian buyers. Red Sea routes can face security risks of their own, and pipelines are also vulnerable to attack or technical disruption. Liquefied natural gas remains a separate concern because Qatar’s LNG exports rely heavily on maritime routes and cannot be diverted through oil pipelines.
For Gulf governments, the borrowing boom is therefore not just about building a new Hormuz. It is about buying strategic flexibility. If the projects are completed on time, the region could enter the next crisis with more export options, stronger investor confidence and less dependence on a single waterway for oil flows.
| Important Note
The bypass projects could reduce oil-route exposure, but they will not fully remove regional security risks or LNG dependence on maritime routes. |
Disclaimer: This article is for general information only and should not be treated as investment, energy trading or geopolitical advice. Figures may change as projects and debt issuances develop.
