Europe is pursuing alternative trade and energy infrastructure to bypass the Strait of Hormuz after conflict-driven fuel price shocks demonstrated the economic vulnerability of relying on geopolitically unstable chokepoints. The European Union is turning to Gulf states and India to build energy security infrastructure that reduces exposure to supply disruptions while preserving market access.
European Commission President Ursula von der Leyen told G7 leaders at this week's summit that "alternative export routes have been created that are more resilient and offer choices" and highlighted the India-Middle-East-Europe Economic Corridor, or IMEC, as a key project. The initiative represents a strategic shift toward supply-chain diversification and energy independence at a time when Russia shows few signs of curbing its belligerence and the U.S. chips away at strategic bonds.
The Economic Cost of Dependency
Von der Leyen revealed that the EU spent 25 billion euros ($29 billion) more to import oil and gas in just the first 54 days of the Iran war while facing the risk of a longer-term jet fuel shortage. This fiscal burden underscores the market consequences of energy infrastructure concentrated in conflict zones. She and European Council President Antonio Costa said during an EU leaders' meeting in April that the bloc is "ready to team up with Gulf countries" to help set up new energy infrastructure circumventing conflict hot spots like the Strait of Hormuz.
The EU itself has supported IMEC through a memorandum of understanding, but only a handful of its 27 member states are formal signatories. A high-ranking EU diplomat, who spoke on condition of anonymity because he was not authorized to disclose the contents of confidential discussions, said the focus now is on translating that vision into practical implementation across its three pillars: transport and trade connectivity, energy connectivity and digital connectivity. He said it could involve new pipelines and transmission cables, among other infrastructure. The EU's press office declined to provide a prospective timeline for the project.
Proven Alternatives Already Operating
The value of alternative routes is evident in Saudi Arabia's East-West Pipeline running from its eastern oil fields to the Red Sea. After the Iran war started, Aramco ramped up transport to the maximum capacity of 7 million barrels of oil per day. The leaders of G7 nations are discussing ways of financing and building infrastructure, "sometimes on the terrestrial part, that will be able to go outside of the track of the Strait of Hormuz," French Foreign Ministry spokesperson Pascal Confavreux told The Associated Press.
An EU official told The Associated Press that the bloc would encourage European companies to invest in renewable energy projects in the Gulf to supply the EU's energy demand. The official spoke on condition of anonymity because they could not speak about the EU's plans publicly. Gabriel Mitchell, an analyst with the German Marshall Fund think tank, said the most likely projects in the near term are oil and gas pipelines, which have the shortest construction timeline, and subsidizing repairs at Gulf facilities that Tehran targeted during the war. Mitchell said any new projects would need to fall in line with the EU's green policies, which means pipelines, for example, would likely be built with future dual-use capabilities of transporting both gas and possibly hydrogen.
Political Obstacles to Implementation
IMEC would pass through Israel and enjoys its support. Israeli Prime Minister Benjamin Netanyahu last year said he had spoken with his Indian counterpart Narendra Modi about IMEC, calling it "a very revolutionary and transformative development that we want to bring into place." Lianne Pollak-David, co-founder of the Israel-based Coalition for Regional Security, told a recent online briefing that U.S. leadership would be key to moving IMEC forward by helping in the normalization of relations between Israel and Saudi Arabia, an essential player in the project. "Without normalization between Israel and Saudi Arabia, IMEC cannot be truly realized," she said.
Saudi Arabia has said it will only normalize relations with Israel if accompanied by a clear pathway to Palestinian statehood, something Netanyahu opposes. It remains unclear how the Iran war, launched by the U.S. and Israel and damaging to Gulf Arab countries, may influence Saudi Arabia's thinking. Saudi officials declined to comment when asked about their position regarding IMEC.
Complementary Infrastructure Projects
Another project is the Great Seas Interconnector, an EU-backed electricity cable envisioned to stretch 1,208 kilometers (750 miles) to connect the power grids of continental Europe with EU member Cyprus and eventually Israel. The GSI is bogged down in red tape over its financing, but its potential is significant not only for ending the energy isolation of Cyprus and Israel but also acting as an energy link to India and likewise forming part of IMEC.
Gallia Lindenstrauss, senior fellow with the Israel-based Institute for National Security Studies, called GSI a "very pragmatic solution for the modern energy needs" that paves the way for the transition to green energies. "As energy security and grid backup move to the forefront of the global agenda, this project provides a flexible platform," Lindenstrauss said.
The U.S. is helping to foster closer energy ties among Greece, Cyprus and Israel as it sees the Eastern Mediterranean as "an increasingly important region for global energy development," U.S. Secretary of Energy Chris Wright said last week. Wright was in Houston to inaugurate the Eastern Mediterranean Energy Center at Rice University, which aims to boost cooperation on developing natural gas deposits, U.S. liquefied national gas infrastructure and energy transportation networks in the European region.
Why This Matters:
The EU's 25 billion euro cost overrun in just 54 days demonstrates how geopolitical instability translates directly into fiscal burdens on European economies and consumers. Alternative infrastructure routes represent not government expansion but market-enabling investment that allows private energy companies to operate without disruption from regional conflicts. The focus on Gulf partnerships and projects like IMEC reflects recognition that energy security requires diversified supply chains rather than dependence on single chokepoints vulnerable to hostile actors. However, the lack of timelines, limited member state participation, and diplomatic obstacles between Israel and Saudi Arabia raise questions about whether bureaucratic processes will delay market-driven solutions. The tension between the EU's green policy mandates and the immediate need for oil and gas infrastructure highlights the challenge of balancing long-term environmental goals with near-term energy security and economic stability.