Iran’s Strait of Hormuz Crisis Accelerates Development of Alternative Trade Routes

The ongoing crisis in the Strait of Hormuz is prompting nations to rapidly develop alternative Gulf-to-Europe trade routes, with Iraq’s ambitious $24 billion “Development Road” project emerging as a frontrunner in these efforts, according to regional experts.

Iranian forces have effectively closed the vital waterway by laying mines and threatening commercial vessels, causing shipping traffic to plummet by 95% from pre-crisis levels of 130-140 vessels daily. The restrictions, which began on February 28 following U.S.-Israeli strikes, were reimposed with greater force on April 18.

“The Strait of Hormuz remains indispensable for energy, but it is no longer treated as a default. That shift is permanent given the war,” said Muhanad Seloom, an analyst with the Middle East Council on Global Affairs and assistant professor at the Doha Institute for Graduate Studies.

President Donald Trump has issued stern warnings to Tehran against further escalation and signaled U.S. readiness to take action to keep the strait open. Meanwhile, international allies including Japan and European nations have issued a joint statement expressing their commitment to ensuring safe passage through this critical maritime corridor.

The situation has triggered urgent high-level consultations, with the Trump administration meeting oil executives as global markets react to the disruption. Crude oil prices have surged in response to the crisis, reflecting the strait’s critical importance to worldwide energy supplies.

Against this backdrop, Iraq’s Development Road project is gaining momentum. Prime Minister Mohammed Shia al-Sudani inaugurated the first 63-kilometer stretch in 2025, with Phase 1 scheduled for completion by 2028. The project will establish a route from Iraq’s Grand Faw Port to Turkey and onward to Europe.

“What was described by the Iraqi government as a flagship of Iraqi statecraft now has a regional rationale that governments and financiers treat as essential rather than aspirational,” Seloom explained. “Sudani seems to be positioning Iraq exactly where he thinks its geography always suggested, as a connecting state between the Gulf, Turkey and Europe.”

The Development Road is expected to generate approximately $4 billion in annual transit revenue for Iraq, potentially transforming the nation from an oil-dependent economy to a logistics hub. “Iraq’s Development Road means every container moving through Basra instead of Iranian-controlled waters is a reduction in Tehran’s leverage over Iraq,” Seloom noted.

Other regional infrastructure projects are also being accelerated in parallel. Saudi Arabia’s East-West Petroline pipeline is operating near its 7 million-barrel-per-day capacity, with expansion plans under consideration. The United Arab Emirates’ ADCOP pipeline to Fujairah has reached maximum utilization, prompting discussions about constructing a second line.

Turkey stands to gain significantly from these developments. “Turkey will be the single largest beneficiary. Combined with the Zangezur and Middle Corridors, Ankara becomes the overland bridge between Asia and Europe,” Seloom observed. These Turkish corridors, which bypass Iran via the Caucasus, are estimated to be four to five years from completion.

Additionally, six Gulf-backed overland fiber projects are underway through Syria, Iraq, and the Horn of Africa, further reducing dependence on routes vulnerable to Iranian interference.

For Europe, these alternative corridors will provide an additional overland option by 2028 or later, though they offer no immediate solution to the current crisis. However, they represent a strategic shift that “marginally reduces structural dependence on the unreliable Suez–Red Sea axis,” according to Seloom.

The International Maritime Organization and shipping industry representatives have expressed grave concerns about Iran’s actions in the strait, warning that imposing tolls or restrictions would set a dangerous precedent for international shipping lanes globally.

As commercial vessels remain at risk and thousands of sailors find themselves effectively trapped by the crisis, the development of these alternative routes represents not just a temporary workaround but a fundamental reshaping of regional trade infrastructure with far-reaching geopolitical implications.