Plans to build canals bypassing the Strait of Hormuz are not merely engineering projects but a geopolitical struggle for energy sovereignty in the Gulf, where Saudi Arabia seeks to reduce Iran’s influence but faces enormous technical and financial obstacles.
Samyar Rostami
In 2008, the initial plan included a 180-kilometer canal connecting the Persian Gulf coast near Dubai to the port of Fujairah in the Indian Ocean was proposed.
A practical solution of multilateral cooperation with Iran will certainly be cheaper and easier
Later, a water canal was proposed from near the Kuwaiti border to the city of Yanbu on the Red Sea coast with a length of 1,200 kilometers, a width of 200 meters, and a depth of 15 meters. Another artificial waterway from the Persian Gulf to the Red Sea was planned with a length of about 950 to 960 kilometers, a depth of about 25 meters (to accommodate large container ships), and a width of about 150 meters.
Another proposed route is from the eastern coast of the port of Dammam to the Red Sea through the Rub al-Khali desert.
A decade ago, a think tank in Riyadh announced that a comprehensive study was underway to connect the Persian Gulf to the Arabian Sea via a waterway called the “Al Arab Canal” or “Salman Canal.” The 950-kilometer project would run 630 kilometers in Saudi Arabia and 320 kilometers in Yemen.
The de facto closure of the Strait of Hormuz on May 8, 2026, has forced GCC countries to rethink their oil and trade routes, rail corridors, and energy storage centers, and the region’s logistics map.
Opportunities and Benefits
Riyadh has been considering alternative routes to bypass the Strait of Hormuz for decades. A large portion of Saudi Arabia’s oil exports pass through this route, and “diversification of export routes” is a key variable in Riyadh’s energy security. As of March 2026, Saudi Arabia has diverted crude oil shipments from the Persian Gulf to Yanbu with a pipeline.
Certainly, the water canal projects can be consistent with the goals of Saudi Vision 2030 to reduce dependence on oil, diversify the economy, develop large infrastructure (such as NEOM), and transform Saudi Arabia into a global logistics hub.
Water canals are considered a long-term maritime solution. Therefore, the policy of bypassing the Strait of Hormuz contributes to the main goals of energy security, reducing Iranian influence in controlling the energy flow of the Persian Gulf, reducing insurance costs, and diversifying Saudi Arabia.
By reducing the distance of ships, water canals can balance traffic flow to some extent and develop inland ports, intermodal terminals, and rail connections, tourism, industrial, aquaculture, and renewable energy projects along the way, or take a step towards creating a multimodal transportation network in Saudi Arabia.
Water canals can connect ports in the east, west, and south of the peninsula while generating transit revenue and accelerating the growth of new cities. The construction and maintenance of the canals could also create hundreds of thousands of direct and indirect jobs.
Saudi Arabia could also receive billions of dollars in annual transit revenue from the passage of commercial ships and tankers from other countries. Or it could minimize the risk of disruption of the Strait of Hormuz for Saudi Arabia and its Arab allies.
From this perspective, the plans for the peninsula’s water canals could also be a geopolitical effort to change the energy structure and security of the Middle East by relatively neutralizing Iran’s influence on maritime bottlenecks, reducing risk, and reshaping the regional balance.
Obstacles and Challenges
Despite the plans, water canal projects face significant obstacles. The environmental impacts of the canal through ecologically sensitive areas could seriously damage the unique ecosystems of the regions.
No direct “water canal” project has yet been implemented. Overcoming the technical and engineering challenges of traversing mountains and shifting sands, managing erosion, providing water to fill the canals, and maintaining them in weather conditions requires advanced drilling and engineering technologies.
Canal projects in Oman’s Musandam Peninsula, traversing through rough rock up to 2,000 meters in a 90-kilometer channel, are economically very difficult.
The 15-meter depth of each channel is not enough for giant tankers. A 150-meter-wide channel and deepening each channel to 25 meters would require drilling into rock layers in mountainous regions such as Yemen or Oman (sometimes as high as 700 meters above sea level) would be challenging.
The enormous cost of building an astronomical canal (hundreds of billions of dollars) and financing, likely through government investment and foreign partners, is challenging. Wider estimates are as high as $250-300 billion.
The coast of Saudi Arabia does not face the Arabian Sea, while the coast of eastern Yemen does. Any waterway through Yemen requires bilateral or multilateral agreements and the establishment of governance, security, and political stability.
Alongside Saudi Arabia and the UAE’s rivalry in southern Yemen, for Riyadh, eastern Yemen serves as a buffer zone and a strategic fulcrum for connecting the Arabian Sea.
Despite Aden’s efforts to exploit strategic sea lanes in the Arabian Sea, eastern Yemen is not completely secure, subject to attacks and a fragile ceasefire between Sanaa and Saudi Arabia. Also important is land and air security to protect strategic infrastructure. The artificial canal and any pumping stations, canal dams are more vulnerable and there is a risk of military threats or sabotage by multiple actors.
There is also the risk of ships getting stuck and sinking in the narrow canal, as in the Suez Canal in 2021. The waterways plan cannot meet immediate needs. While oil demand is likely to decline after the 2030s-2040s, a huge investment in a logistics canal may not be enough.
Outlook
For a real canal from the Persian Gulf to the Red Sea or Indian Ocean, it must have a suitable geographical route with minimal elevation differences, minimal excavation, and not cross tense areas. Therefore, water canal plans have so far remained mostly at the level of feasibility studies and media speculation.
In 2018, some plans became more serious in Saudi Arabia. Still, for now, Saudi Arabia’s strategy is focused on developing oil pipelines and logistics and rail networks rather than on a “water canal.”
In fact, there has not yet been an official document, government statement, or credible and public report, tender, or binding government timetable for a canal from the Persian Gulf to the Indian Ocean or the Red Sea by Riyadh.
A “complete” bypass of the Strait of Hormuz is not a realistic option for peacetime, but rather a “backup plan” (Plan B) for crises. Therefore, multilateral cooperation to create security in the Red Sea and the Persian Gulf could be more important.
In the short and medium term, no project will completely replace Hormuz. Despite the financial, technical, environmental, and geopolitical obstacles, political alignment and global geopolitical and geo-economic developments will certainly have a more significant impact on the construction of any water canal in the peninsula.
Water canals will remain in the study and design phase in the short term. In the medium term, if opportunities and studies are positive and threats are less, steps may be taken to begin construction. The success of canals construction depends on careful planning, international cooperation and management of multiple risks, oil prices and technological advances.
A practical solution of multilateral cooperation with Iran will certainly be cheaper and easier. Also, the possible improvement of regional relations and efforts to de-escalate tensions will reduce incentives to build a water canal to “detour”.
In conditions of regional stability, the construction of water canals in the Arabian Peninsula, along with projects such as the tunnel and multilateral corridor under the Strait of Hormuz, could be in line with cooperation with Tehran and logistics corridors such as the North-South International Corridor, and could also have important impacts on the logistics of Eurasia and West Asia.
Samyar Rostami, a political observer and senior researcher in international relations
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