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

Chokepoints Under Tehran's Shadow

Regardless of the official status of U.S.-Iran negotiations, Tehran is acutely aware of its commanding position over two of the world's most critical maritime energy transit arteries: the Strait of Hormuz and the Bab el-Mandeb Strait. This control is expected to persist as long as the current Islamic regime remains in power. Major global players, including Washington, London, Brussels, Beijing, and Moscow, acknowledge this reality. The eastern approach to the Strait of Hormuz is effectively dominated by substantial Iranian military presence, posing a significant barrier to oil and liquefied natural gas (LNG) shipments originating from the Middle East. This strategic positioning impacts flow both eastward towards major Asian consumers like China and India via the Gulf of Oman and the Arabian Sea, and westward into the Gulf of Aden.

Simultaneously, Iran-backed Houthi forces in Yemen exert influence over maritime traffic attempting to navigate from the Gulf of Aden into the Bab el-Mandeb Strait. From there, vessels would typically proceed into the Red Sea, pass through the Suez Gulf, and enter the Mediterranean. Prior to the U.S. and Israeli launch of 'Operation Epic Fury' on February 28th, Iran had previously hinted at the possibility of closing these waterways if it felt threatened. Following recent incidents, including Iran's own actions in the Strait of Hormuz and interference in the Bab el-Mandeb, the Islamic Republic appears to have formalized its retaliatory strategy against potential threats.

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A New Corridor Emerges

In response to this evolving landscape, new strategic initiatives between the U.S. and Saudi Arabia are being explored to mitigate Iran's maritime influence. One concrete development involves the MERA Oil private consortium, a joint venture backed by U.S. firm MWG Enterprises, the Patel Family Office, and PWS, an affiliate of Saudi Arabia's AHQ Group. This consortium formally announced its plans late last month. After three years of partner discussions regarding potential sites, the group is now in the final selection phase for a location for its planned $5 billion integrated refinery and energy export corridor. This facility is specifically designed to operate outside the Strait of Hormuz.

While the precise location remains undisclosed, the project centers on a substantial 200,000-barrel-per-day (bpd) integrated refinery. This refinery will be connected to deepwater port infrastructure, extensive storage for crude oil and refined products, and marine export facilities. The consortium emphasizes that its placement outside the Strait of Hormuz is a deliberate strategy to create a resilient export platform with direct access to international shipping lanes. The initiative also aims to establish a long-term industrial base, bolstering regional manufacturing, logistics, technical expertise, and critically, energy security.

Once the site is officially confirmed, the project is slated to proceed to final site due diligence and engineering design. Phase One mechanical completion is targeted for the end of 2029, with commissioning and commercial operations to follow. Given the project's scope and its alignment with broader efforts across the six Gulf Cooperation Council (GCC) states, only specific geographies offer a viable means to circumvent both the Strait of Hormuz and the Bab el-Mandeb Strait. These locations likely reside along the Gulf of Oman or the Arabian Sea, such as Fujairah in the UAE or Duqm/Salalah in Oman, both providing direct, unimpeded access to the Indian Ocean.

The IMEC Vision and its Implications

This strategic positioning aligns perfectly with a long-standing U.S. objective: the India–Middle East–Europe Economic Corridor (IMEC). Although initially launched at the 2023 G20 Summit, regional conflicts have hampered its progress. However, U.S. planners now estimate that IMEC could eventually reroute approximately 60% of container traffic currently risking transit through the Strait of Hormuz. The corridor's design features two primary components: an eastern maritime leg connecting India's western ports to the Arabian Gulf, and a northern overland rail network extending through Saudi Arabia and Jordan to Israel's Port of Haifa. From Haifa, short-sea shipping would provide a direct link to Europe.

A significant wartime redesign for 2026 anchors the eastern maritime leg in Oman, rather than the UAE. This adjustment allows ships arriving from India to unload their cargo outside the Strait of Hormuz before transferring it to the Arabian Peninsula's rail network. Discussions are also underway to establish 'IMEC Plus' nodes via Egypt and Syria, creating a more extensive web of land-based alternatives. Furthermore, new legal frameworks, including the India–EU free trade agreement and the U.S. Senate’s Eastern Mediterranean Gateway Act, have designated Greece as Europe's primary entry hub, according to a senior European Union security source.

Crucially, the IMEC initiative offers Washington a significant degree of influence over oil and LNG flows, contrasting with China's current leverage via its substantial ties with Iran under the 'Iran-China 25-Year Comprehensive Cooperation Agreement'. This proposed infrastructure shift represents a proactive effort to rebalance regional energy dynamics and secure alternative transit routes, reducing reliance on maritime chokepoints vulnerable to geopolitical disruption.

Reading Between the Lines

The confluence of Iran's assertive maritime control and the U.S./Saudi-backed push for alternative energy corridors like MERA Oil and the enhanced IMEC points to a significant strategic realignment in global energy logistics. The substantial $5 billion investment in the MERA Oil refinery and export facility, slated for completion by the end of 2029, alongside the potential diversion of 60% of container traffic via IMEC, signals a deliberate move to de-risk energy supply chains.

For traders and investors, this development is critical. It suggests a medium-term strategy to diminish the geopolitical risk premium associated with the Strait of Hormuz and the Bab el-Mandeb. The focus on Oman and the Arabian Sea coast as key nodes for IMEC, and the broader GCC alignment, indicates a concerted effort to build infrastructure that bypasses Iranian influence entirely. Key risks to monitor include the pace of project execution, potential diplomatic hurdles, and the ongoing security situation in the Red Sea and Gulf regions, which could impact timelines and the viability of these new routes.

The implications extend beyond energy markets. The successful implementation of these corridors could diminish the strategic importance of Iran's current maritime dominance, potentially impacting regional geopolitical leverage. It also presents opportunities for economies located along the new routes, such as Oman and Saudi Arabia, to enhance their roles as logistical and energy hubs. Smart money will be watching the progress of site selection for MERA Oil and the finalization of the eastern maritime leg of IMEC, as these are concrete indicators of the shift away from chokepoint reliance. The potential impact on oil prices, particularly the risk premium associated with supply disruptions, will be a key focus.

The successful development of these alternative routes could also affect currency pairs sensitive to oil prices and regional stability, such as USD/CAD. Furthermore, the broader geopolitical implications might influence risk appetite in equity markets, potentially impacting energy stocks and broader indices like the S&P 500. The ongoing strategic competition between the U.S. and China in the region, particularly concerning energy flows and infrastructure investment, adds another layer of complexity that market participants should observe.