Could Egypt’s ‘SUMED’ Pipeline Temporarily Replace the Strait of Hormuz?

Egypt’s Petroleum Minister Karim Badawi during an inspection tour of SUMED port (Egyptian Petroleum Ministry)
Egypt’s Petroleum Minister Karim Badawi during an inspection tour of SUMED port (Egyptian Petroleum Ministry)
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Could Egypt’s ‘SUMED’ Pipeline Temporarily Replace the Strait of Hormuz?

Egypt’s Petroleum Minister Karim Badawi during an inspection tour of SUMED port (Egyptian Petroleum Ministry)
Egypt’s Petroleum Minister Karim Badawi during an inspection tour of SUMED port (Egyptian Petroleum Ministry)

Amid the ongoing Iran war and Tehran’s announcement of the closure of the Strait of Hormuz, a key artery for global energy supplies, Egypt has begun highlighting the SUMED pipeline linking the Red Sea and the Mediterranean as a potential temporary alternative for oil transport.

The move has raised questions about whether the pipeline, a vital connection between the two seas, could help offset disruptions to the volatile waterway.

Egypt’s Minister of Petroleum and Mineral Resources Karim Badawi addressed the issue during a government press conference on Tuesday, saying Egypt “has sufficient technical and logistical capabilities to support this strategic route.”

He said the SUMED pipeline enhances the flexibility of oil supply flows in the region and confirmed Egypt’s readiness to cooperate with Gulf states to facilitate oil transport from the Red Sea to the Mediterranean through the line.

Energy experts who spoke to Asharq Al-Awsat agreed that the pipeline could help ease the current energy crisis amid the absence of any political solution to end the war, noting the line was originally designed as an alternative route when oil shipments face obstacles passing through the Suez Canal.

SUMED pipeline

The pipeline is owned by the Arab Petroleum Pipelines Company (SUMED), an Arab joint venture led by Egypt, with a 50% stake held by the Egyptian General Petroleum Corporation, alongside partners from Gulf states.

The pipeline runs across Egypt from Ain Sokhna on the Gulf of Suez to Sidi Kerir on the Mediterranean coast, with a capacity of about 2.8 million barrels per day.

According to Egypt’s petroleum ministry, the pipeline transported about 24.9 billion barrels of crude oil and more than 730 million barrels of petroleum products from its launch in 1974 through 2024.

Ahmed Kandil, head of Energy Studies Program at the Al-Ahram Center for Political and Strategic Studies, said the line’s importance lies in easing disruptions to oil trade following Tehran’s declaration that it had closed the Strait of Hormuz.

He told Asharq Al-Awsat that oil shipments could reach the pipeline via tankers transporting crude from Saudi Arabia’s Yanbu port to Egypt’s Ain Sokhna port, from where it would move through the pipeline to the Mediterranean and onward to Europe.

He said coordination with Gulf states is underway to contain concerns over energy supplies, particularly among European consumers.

Kandil added that the arrival of part of Gulf exports to European markets is highly important, helping limit spikes in Brent crude prices, which have already surpassed $80 per barrel.

“The growing importance of the Egyptian pipeline comes amid the absence of a political horizon, which means the current conflict could be prolonged,” he said.

Storage capacity

According to the US Energy Information Administration, the main reason for building the SUMED pipeline at this location is that very large crude carriers — capable of transporting about 2.2 million barrels — cannot pass through the Suez Canal due to their excessive weight and width, which could risk grounding.

Instead, they offload their cargo at Ain Sokhna, where the oil is transported through the pipeline to the other side of Egypt. Smaller vessels then reload the crude at Sidi Kerir and sail to Europe and the United States.

Energy markets expert Ramadan Abu Al-Ala said the Egyptian pipeline serves as an alternative to the Suez Canal and could temporarily ease the crisis caused by the closure of the Strait of Hormuz.

He noted that the pipeline is particularly effective for oil tankers arriving from Saudi Arabia, Oman, Bahrain and the United Arab Emirates, which can unload at Ain Sokhna before the crude is transported to the Mediterranean and European markets.

Abu Al-Ala expects SUMED to become even more important for Gulf oil exports to Europe if the war drags on, increasing reliance on the pipeline. However, he said this would require enhanced security measures for oil tankers operating in the Red Sea.

Energy market experts also highlighted another advantage: the pipeline’s large storage capacity. SUMED operates storage tanks with a total capacity of 40 million barrels of oil.

In February 2019, Saudi Aramco signed two agreements with the company to provide storage capacity for diesel and fuel oil.



Iran War to Weigh More on Indian Growth than Inflation, Keeping Interest Rates Low

This frame grab from a video released by the US Department of Defense on March 4, 2026, shows what the Department of Defense says is periscope footage of a US Navy submarine firing on and sinking an Iranian warship in the Indian Ocean. (Photo by US Department of Defense / AFP)
This frame grab from a video released by the US Department of Defense on March 4, 2026, shows what the Department of Defense says is periscope footage of a US Navy submarine firing on and sinking an Iranian warship in the Indian Ocean. (Photo by US Department of Defense / AFP)
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Iran War to Weigh More on Indian Growth than Inflation, Keeping Interest Rates Low

This frame grab from a video released by the US Department of Defense on March 4, 2026, shows what the Department of Defense says is periscope footage of a US Navy submarine firing on and sinking an Iranian warship in the Indian Ocean. (Photo by US Department of Defense / AFP)
This frame grab from a video released by the US Department of Defense on March 4, 2026, shows what the Department of Defense says is periscope footage of a US Navy submarine firing on and sinking an Iranian warship in the Indian Ocean. (Photo by US Department of Defense / AFP)

The US and Israel's attack on Iran is expected to ‌weigh more on India's economic growth than its inflation, which will encourage the Reserve Bank of India to keep interest rates low, three sources familiar with policymakers' thinking and analysts said.

The conflict, which has rippled out across much of the Middle East, has pushed up oil prices by about 15%, disrupted gas flows from the region and triggered selloffs in Indian equity, debt and currency markets, with the rupee hitting a record low and bond yields rising due to concerns about India's current account deficit and the risk of higher inflation.

Despite a weaker rupee and higher crude prices, the central bank is unlikely to take a hawkish turn, all three sources familiar with policy deliberations said.

Current assessments could change, one of the sources cautioned, in case of extreme developments in the Middle East.

The thinking of policymakers appears to have diverged from the market reaction.

Interest rates have risen in emerging and global markets since the Gulf conflict broke out. Traders in India's swap markets have added to bets on at least one rate increase over the next 12 months.

"I don't feel the market has sufficiently priced the risk from oil prices rising significantly and there could be room for swap rates to move even higher ‌if Brent oil ‌holds above $80 per barrel over the next couple of weeks," said Ritesh Bhusari, joint general manager for ‌treasury at ⁠South Indian Bank.

The ⁠RBI's rate-setting panel, which meets for its next policy review in about a month, paused rate cuts at its last meeting in February after reducing the policy repo rate by 125 basis points in 2025.

The sources declined to be identified as they are not authorized to speak to the media. An email sent to the RBI on Wednesday seeking comment was not answered.

Conflict in the Middle East has muddied the picture for central bank policy projections globally. Traders have pushed back wagers on rate cuts by the Federal Reserve while adding to bets on a hike by the European Central Bank.

A rise in oil prices above $100 per barrel or a faster-than-expected pass-through of costs could run the risk of turning global monetary policy more hawkish, according to analysts at Goldman ⁠Sachs.

QUICKER HIT TO GROWTH

An immediate risk to India's growth comes from disruptions to gas supplies.

On Tuesday, Indian ‌companies reduced natural gas supplies to industries in anticipation of tighter flows from the Middle East, ‌a move that could hurt output in sectors including fertilizers and power.

If gas supply disruptions persist for more than four weeks, they could hurt economic growth ‌for at least a quarter, one of the sources said.

If oil prices remained above $90 to $95 a barrel for three to four quarters in ‌a row, the source said, India's expected 7%-plus economic growth in the next financial year would take a more sustained hit.

Under that scenario, growth could slow to about 6.5% from the current expectation for more than 7%, the person added.

Cuts in gas supplies to fertilizer and power companies could reduce output in those sectors in the near term, weighing on growth with a lag in the first and second quarters of the next fiscal year, a second source said.

“If oil prices ‌remain high for an extended period, the ‘Goldilocks phase’ for the Indian economy will end,” the person added.

INFLATION BUFFERS

Inflation, meanwhile, is likely to rise more modestly in the near term.

Retail fuel prices in India ⁠have not moved in tandem with global ⁠crude prices, as fuel retailers often hold prices steady. The government can also cut excise duties to shield consumers if global prices remain elevated, the first source said.

“There is plenty of room on the inflation front,” the third source said. “If inflation were closer to 5%, there might have been a case for a pre-emptive hike, but it is currently near the lower end of the RBI’s tolerance band.”

India's retail inflation was at 2.75% in January, closer to the lower end of the RBI's 2% to 6% tolerance range.

A 10% to 20% rise in global oil prices could lift Indian inflation by 25 to 50 basis points if fully passed through to consumers, according to a Deutsche Bank estimate. With a partial pass-through, consumer price inflation could rise to the 4.5% to 5% range, it said.

“If the fiscal authorities keep retail pump prices unchanged, the RBI would be less worried about near-term inflation risks and focus more on downside growth risks,” Citigroup chief India economist Samiran Chakraborty said in a note this week.

“This could perversely make the policy stance less hawkish than what the immediate market reaction to higher oil prices might suggest,” he said.

However, the central bank may also be constrained from delivering more rate cuts if oil prices remain elevated.

“While the RBI is unlikely to hike rates, if inflation were to rise towards 5% due to higher oil prices, it would also be unlikely to cut rates to support growth in such a scenario,” Deutsche Bank chief India economist Kaushik Das said.


China Reportedly Tells Oil Refiners to Suspend Exports

FILE PHOTO: A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. REUTERS/Stringer/File Photo
FILE PHOTO: A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. REUTERS/Stringer/File Photo
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China Reportedly Tells Oil Refiners to Suspend Exports

FILE PHOTO: A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. REUTERS/Stringer/File Photo
FILE PHOTO: A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. REUTERS/Stringer/File Photo

China has told its largest oil refiners to suspend exports of diesel and gasoline, Bloomberg News reported Thursday, citing unidentified sources, as the war in the Middle East risks an energy supply crunch.

China is a net importer of oil and is one of several major Asian economies that depend on the vital Strait of Hormuz for energy. Traffic through the strait is currently blocked.

The Middle East was the source of 57 percent of China's direct seaborne crude imports in 2025, according to analytics firm Kpler.

Officials from China's top economic planner, the National Development and Reform Commission, met refinery representatives "and verbally called for a temporary suspension of refined product shipments that would begin immediately,” Bloomberg said Thursday, citing unidentified people familiar with the matter.

"The refiners were asked to stop signing new contracts and to negotiate the cancellation of already-agreed shipments," it said.

A spokesperson for China's foreign ministry denied knowledge of the suspension when asked about it at a regular news conference.

PetroChina, Sinopec, CNOOC, Sinochem Group and private refiner Zhejiang Petrochemical regularly obtain fuel export quotas from the government, Bloomberg said.

The companies did not respond to AFP's requests for comment.


UAE Shares Extend Losses

A man follows the stock market shares on a screen with stock information at the Dubai Financial Market (DFM) in the Gulf emirate of Dubai, United Arab Emirates, 04 March 2026. EPA/ALI HAIDER
A man follows the stock market shares on a screen with stock information at the Dubai Financial Market (DFM) in the Gulf emirate of Dubai, United Arab Emirates, 04 March 2026. EPA/ALI HAIDER
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UAE Shares Extend Losses

A man follows the stock market shares on a screen with stock information at the Dubai Financial Market (DFM) in the Gulf emirate of Dubai, United Arab Emirates, 04 March 2026. EPA/ALI HAIDER
A man follows the stock market shares on a screen with stock information at the Dubai Financial Market (DFM) in the Gulf emirate of Dubai, United Arab Emirates, 04 March 2026. EPA/ALI HAIDER

The UAE stock markets fell in early trade on Thursday, extending losses from the previous session after exchanges reopened following a two-day trading halt triggered by Iran’s missiles and drones.

The UAE's stock markets reopened on Wednesday.

Both exchanges said they will temporarily set a 5% lower price limit on securities.

Dubai's main share index sank more than 4%, as stocks retreated across the board, with top lender Emirates NBD and blue-chip developer Emaar Properties both losing 4.9%.

Elsewhere, budget airline Air Arabia declined 4.9%.

However, utility firm Dubai Electricity and Water Authority advanced 4.4%.

In Abu Dhabi, the index retreated 2.3%, with the country's biggest lender First Abu Dhabi Bank declining 4.9% and Aldar Properties was ⁠down 5%.

Among ⁠other fallers, Abu Dhabi Commercial Bank tumbled 5%.