AYESHA RASCOE, HOST:
The U.S.-Iran war has caused the biggest disruption in oil supply on record, according to the International Energy Agency. That's mostly due to Iranian restrictions on the Strait of Hormuz imposed after the U.S. and Israeli attacks in February. The U.S. had been hoping for a deal to reopen the strait, but that now looks unlikely.
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SCOTT BESSENT: What we are going to see over the next two years - the strait's going to become irrelevant. It is going to become just another body of water.
RASCOE: That's Treasury Secretary Scott Bessent striking a hopeful note as regional allies scramble to build pipelines. NPR's Jane Arraf joins us now from Amman. Hi, Jane.
JANE ARRAF, BYLINE: Hi, Ayesha.
RASCOE: So the Treasury secretary says between half and almost three-quarters of the oil that normally moves through the strait will go through pipelines instead. How likely is that?
ARRAF: In the next two years, not very likely, according to leading global energy analysts. So these pipelines are being built in the Gulf, but they're at varying stages. And the biggest could take years - will take years to be completed. Some of those alternative routes as well - they're still within firing range of Iran and its Yemeni Houthi allies. Here's David Goldwyn. He's a global energy expert who's a former assistant secretary of energy and State Department energy envoy.
DAVID GOLDWYN: I think that we have to accept that this crisis in the Strait of Hormuz, the constraints on exports, are going to be a somewhat permanent feature for the next few years. Prices will be higher. New supply will have to come from elsewhere. It will take time, I think, both to build alternatives from the strait but also for new supply to come online.
ARRAF: And then not everything that is being blocked at the Strait of Hormuz goes through pipelines. Like, liquefied natural gas, which is widely used to heat homes in the U.S., isn't transported that way. And there are commodities like fertilizer. A shortage of fertilizer has already led to higher food prices globally.
RASCOE: So just to paint a picture, for years, oil-producing countries in and around the Gulf - some of the world's biggest oil producers - have pumped oil and then loaded it onto tankers that are now running up against these choke points in the Gulf and from the Houthis near the Red Sea. Oil producers have been hit hard both by attacks and the loss of access to the strait. How have they responded?
ARRAF: Well, they're scrambling for different export routes, and some of that includes building alternate oil terminals. But mostly, we're talking pipelines, not just in the Gulf but Iraq as well, to Turkey. Now, these are huge multibillion-dollar projects. Here's Robert McNally, a former energy adviser in George W. Bush's administration.
ROBERT MCNALLY: The pipeline projects won't be finished in time to help consumers if Hormuz doesn't open, period. And even if all of them were built - even if all of them were built on time, which is impossible - but even if they were, they could still be hit by Iran.
ARRAF: So McNally says it's good to have diversity, have these options, and it will help, but it won't completely offset higher prices.
RASCOE: You've also been in touch with the International Energy Agency. What is it saying about these pipeline alternatives?
ARRAF: Well, it also points out that some of these projects could take several more years. And it notes that even when they're finished, the Strait of Hormuz could still be needed to export around half of prewar levels. They say what's really needed is a long-term regional settlement.
RASCOE: You know, all of this does kind of sound like a wake-up call. Are these supply problems for fossil fuels giving a boost to renewable energy?
ARRAF: Well, David Goldwyn says a lot of countries are looking harder at those alternatives because they don't rely on imports, so they're better for energy security. But still...
GOLDWYN: I think you are seeing a significant push for renewables both in the developed world and the developing world for energy security reasons. But it will not relieve any of those countries of the medium-term risk of fuel, fossil fuel prices, petroleum product prices because they're not easily substitutable in the next five, maybe to eight years, if that.
ARRAF: And then they're mostly substituting electricity. So that still leaves a gap for transportation, particularly heavy equipment, and a gap in developing countries.
RASCOE: That's NPR's Jane Arraf. Jane, thank you so much.
ARRAF: Thank you. Transcript provided by NPR, Copyright NPR.
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