Inside the U.S.–Israel–Saudi Plan to Cut Iran Out of Global Oil

Whatever officially occurs next in the on-again/off-again negotiations towards a peace deal between the U.S. and Iran, unofficially Tehran knows that it has established de facto control over both the world’s two key maritime energy transit routes -- the Strait of Hormuz and the Bab el-Mandeb Strait -- for at least as long as the Islamic regime remains in place in Iran. Washington, London, Brussels, Beijing, and Moscow know it too. The Strait of Hormuz remains effectively controlled by vast Iranian forces down its full eastern stretch, precluding any oil or liquefied natural gas (LNG) moving out from the Middle East and making its way either East through the Gulf of Oman and then the Arabian Sea to the big Asian buyers of China and India, or West into the Gulf of Aden. Meanwhile, the Iran-backed Houthis in Yemen control what happens to tankers trying to access the Bab el-Mandeb Strait from the Gulf of Aden, and before sailing up into the Red Sea before passing through the Gulf of Suez and into the Mediterranean Sea. Before ‘Operation Epic Fury’ was launched by the U.S. and Israel on 28 February, Iran had flagged the possibility that it would close both waterways if it were threatened; following the attacks, and Tehran’s closure of the Strait of Hormuz and interference in the Bab el-Mandeb Strait, the Islamic Republic has now permanently formalised its future response to any such threats. So, how can new plans between the U.S. and Saudi Arabia mitigate this situation, and when might they become effective? Or is another, more secretive plan currently being discussed between Washington, Tel Aviv, and the Gulf states, offer an even better option for dealing with Tehran? A major piece of the infrastructure connected to the U.S./Saudi idea that marks a broader geopolitical shift involves the MERA Oil private consortium -- a joint venture between the U.S.’s MWG Enterprises, the Patel Family Office, and PWS (an associate of the Saudi-headquartered AHQ Group) -- formally announced at the end of last month. Following three years of discussion between the partners on possible sites, the group has entered the final stage of selecting a host for their planned US$5 billion integrated refinery and energy export corridor that will be located outside the Strait of Hormuz. The final location has yet to be formally announced, but the planned development centres on a 200,000-barrel-per-day (bpd) integrated refinery linked to deepwater port infrastructure, large-scale storage of crude and refined products, and marine export facilities. Its position outside the Strait of Hormuz is specifically designed to provide a route-resilient export platform with direct access to international shipping routes, according to the consortium. Its on-the-ground presence would also be aimed at establishing a long-term industrial base that would strengthen manufacturing, logistics, technical capability and -- crucially -- energy security, in the region. Once the site has been officially announced, the project is expected to move into final site diligence and engineering design, with mechanical completion of Phase One targeted for the end of 2029, followed by commissioning and commercial operations. Related: Ukraine Drone Attack Hits Major Oil Refinery Deep Inside Russia Given these broad operational parameters -- and the fact that it is to be aligned with wider efforts across the six Gulf Cooperation Council (GCC) states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) -- only two viable locations would allow for the circumvention of the Strait of Hormuz and the Bab el-Mandeb Strait. They would be somewhere on the Gulf of Oman or the Arabian Sea (such as Fujairah in the UAE, or Duqm/Salalah in Oman), with both offering completely unrestricted access to the Indian Ocean. This would dovetail perfectly into what has long been one of Washington’s most favourite ideas -- the India–Middle East–Europe Economic Corridor (IMEC), as detailed in full in my latest book on the new global oil market order. Originally launched at the 2023 G20 Summit but stalled by regional conflict, U.S. planners now estimate that it could eventually divert around 60% of container traffic that currently risks transiting the Strait of Hormuz. Its architecture is built around two integrated corridors: an eastern maritime leg linking India’s western ports to the Arabian Gulf, and a northern overland rail network running through Saudi Arabia and Jordan to Israel’s Port of Haifa, from where short?sea shipping connects directly to Europe. Crucially, the 2026 wartime redesign anchors the eastern maritime leg in Oman rather than the UAE, allowing ships from India to unload entirely outside the Strait of Hormuz before transferring cargo onto the Arabian Peninsula rail grid. Additional ‘IMEC Plus’ nodes through Egypt and Syria are under discussion to create a wider lattice of land?based alternatives, while new legal frameworks -- including the India–EU free trade agreement and the U.S. Senate’s Eastern Mediterranean Gateway Act -- have formally designated Greece as Europe’s entry hub, according to a senior European Union (E.U.) security source spoken to exclusively last week by OilPrice.com. IMEC would also give Washington a critical degree of control over the oil and LNG flows, rather than China, as has been the case with the Strait of Hormuz and the Bab el-Mandeb Strait, by dint of Beijing’s hold over Iran. This was established under the full terms of the ‘Iran-China 25-Year Comprehensive Cooperation Agreement’, as first revealed anywhere in the world in my 3 September 2019 article and also analysed in full in my latest book on the new global oil market order. Another, even more secretive, option being worked on now towards the same end of cutting Iran out of the global energy supply chain, is another U.S.-originated scheme that would see an overland pipeline built across the Saudi desert to the Israeli border, where a second pipeline -- the Trans-Israel Pipeline (the Eilat-Ashkelon pipeline) laid down between 1968 and 1969 -- would carry it north to ports on the Mediterranean. Ironically, construction on the 42-inch diameter crude oil pipeline officially was originally developed as a secret joint venture between Israel and Iran (under the Shah) to transport Iranian oil from the Red Sea port of Eilat directly to the Mediterranean port of Ashkelon, bypassing the Suez Canal. According to very brief remarks recently on the subject, Israel’s energy minister Eli Cohen highlighted: “The Gulf countries do not want to be dependent on either Iran or the Houthis when it comes to their oil exports, which are their primary source of income, […] If you create a land route, you bypass both Iran and the Houthis ... The best route is through the State of Israel.” Israel’s Prime Minister, Benjamin Netanyahu, has also expressed support for the idea: “Instead of going through the chokepoints of the Hormuz Strait and the Bab-el-Mandeb Strait, we’d just have oil pipelines, gas pipelines going west through the Arabian Peninsula, right up to Israel, right up to our Mediterranean ports and you’ve just done away with the chokepoints for forever. That is definitely possible.” The notion has also found favour within U.S. President Donald Trump’s core team, according to a senior Washington-based source who works closely with the U.S. Treasury. “The infrastructure would stretch across Saudi and Israeli land, which means it would provide a great base for security forces to be stationed to ensure its safety, which in turn would allow for great leverage extension [for Washington] across the region, including for the Abraham Accords, as the president [Trump] wants,” he told OilPrice.com last week. Indeed, these Accords (relationship normalisation deals between Israel and Middle Eastern states, brokered by the U.S.) have long been Trump’s favoured foreign policy device for gradually re-establishing U.S. influence across the region, at the expense of China and Russia, as also covered in full in my latest book on the new global oil market order. “And if Iran -- or any of its backers -- attacked any part of the infrastructure, we [the U.S.] would be fully entitled, along with Israel and our Gulf allies, to hit them [Iran and its allies] harder than ever before, with the definitive goal of regime change,” he concluded. By Simon Watkins for Oilprice.com More Top Reads From Oilprice.com