Treasury Secretary Scott Bessent told 12 News on Thursday that the Strait of Hormuz will never return to its pre-war status, predicting that the waterway responsible for roughly a fifth of the world’s seaborne oil trade will become “irrelevant” within the next two years as global energy flows shift toward underground pipelines.
Asked directly by a 12 News interviewer whether the strait would ever return to how it functioned before the current conflict with Iran, Bessent rejected the framing that the change represented a crisis. “I would say I think they’re saying that in a doomsday sort of way. I would say it in another way,” he said. “The strait is never going back to the way it was because the Iranians have used, or tried to use it as a choke point.”
Bessent went further, forecasting a structural shift in how the world moves oil out of the Persian Gulf. “What we are going to see over the next two years, the strait is going to become irrelevant. It is going to become just another body of water,” he said, adding that “more than 50 or 70% of the energy that moves through the strait now is going to go through underground pipelines.”
The comments came during a wide-ranging interview that also touched on community banking, inflation, Trump accounts, tariffs, and IRS taxpayer privacy, but the Hormuz remarks landed at a moment of acute sensitivity for global energy markets. The strait, which separates Iran from Oman and the United Arab Emirates, has been the central flashpoint of the 2026 Iran war, which began on February 28 when the United States and Israel launched strikes against Iranian targets.
Bessent’s remarks on 12 News followed comments he made earlier in the week on CNBC’s “Squawk Box,” where he said a deal with Iran to reopen the strait “could happen today or tomorrow” and that hundreds, possibly more than 1,000 ships were waiting to depart the Gulf once clearance was granted.
Scale of the Disruption
Before the war, roughly 15 million barrels of Persian Gulf oil moved through the Strait of Hormuz each day, alongside natural gas shipments that made up nearly a fifth of global LNG trade.
By early August, tanker crossings through the strait had slowed to a handful per day, down from 100 to 140 crossings daily before the conflict began. The International Energy Agency has described the disruption as the largest supply shock on record, surpassing both the oil shocks of the 1970s and the loss of Russian pipeline gas that followed Moscow’s invasion of Ukraine.
International Maritime Organization and United Nations estimates place between 1,500 and 2,000 vessels stranded in the Gulf, with thousands of crew members still aboard. The Strait of Hormuz crisis has also produced direct casualties: at least 17 merchant ships have been damaged, two have been captured, and 12 seafarers have been killed or gone missing since the blockade began.
The Pipeline Alternative Bessent Is Betting On
Bessent’s prediction that the majority of Gulf energy exports will eventually move underground rests on infrastructure that Saudi Arabia and the United Arab Emirates built decades ago specifically to hedge against a Hormuz closure. Saudi Arabia’s East-West pipeline, also known as Petroline, was constructed in the 1980s during the Iran-Iraq War and carries crude roughly 750 miles from Abqaiq to the Red Sea port of Yanbu.
The UAE’s equivalent workaround, the Abu Dhabi Crude Oil Pipeline, runs about 248 miles from onshore facilities at Habshan to the port of Fujairah on the Gulf of Oman, entirely bypassing Hormuz. Combined, the two pipelines are estimated to carry between 3.5 million and 5.5 million barrels per day, according to the U.S. Energy Information Administration and the International Energy Agency.
That combined capacity, however, falls well short of the roughly 20 million barrels per day of oil and refined products that historically transited the strait, and both pipelines have already been targeted during the war. Iranian drone strikes hit Fujairah’s storage facilities on three separate occasions in March, and a pumping station on the Saudi pipeline was struck in April, cutting throughput by 700,000 barrels per day.
Energy analysts have noted that Gulf producers are accelerating investment in these bypass routes regardless of how the current negotiations conclude, citing what one analyst described as a “huge trust gap” with Iran that may not be repaired even after a ceasefire.
Where the Ceasefire Talks Stand
Bessent’s 12 News interview came two days after he told CNBC that Washington and Tehran were nearing an agreement to reopen the strait, framing it as guaranteeing “freedom of movement” for commercial vessels and ruling out any Iranian toll on passing ships. Oil prices fell sharply after those remarks, with Brent crude dropping more than 5% to close at $79.49 and West Texas Intermediate falling to $75.89.
Iran has offered a more cautious account of the talks. Foreign Ministry spokesperson Esmaeil Baghaei said an agreement reached between Iran and Oman on a new shipping route was a necessary step but was not, by itself, sufficient to reopen the strait. Tehran has also disputed the characterization of the talks as direct negotiations with Washington, saying its discussions have run through Oman.
Prediction markets have reflected that skepticism. Polymarket traders priced the chance of some form of August agreement at roughly 60%, but gave only an 13% chance that shipping traffic would return to normal by August 31, with a 39% chance that traffic does not normalize at all before the end of the year.
In the 12 News interview, Bessent also cited what he described as the economic toll of Washington’s pressure campaign on Iran, saying the country was facing food inflation of between 150% and 180% and difficulty paying its own troops. “We are never going to let them have a nuclear weapon,” he said, adding that a 30-to-60-day ceasefire could be reached “maybe even today, tomorrow.”
Broader Economic Message
The strait comments were part of a broader appearance in which Bessent argued that the U.S. economy was moving out of what he called a “recovery phase” following what he described as high inflation during the Biden administration. He cited real wage gains of 5.5% for the bottom quarter of earners and pointed to a 15-year high in factory construction activity as evidence of an economic turnaround, while acknowledging that a recent uptick in energy prices had masked some of those gains for consumers.
Bessent also addressed the rollout of Trump accounts, a savings program tied to the administration’s tax legislation, saying more than 7 million families had signed up and that 93% of those households earn less than $200,000 annually.
What Comes Next
Whether Bessent’s two-year timeline for pipeline capacity to overtake the strait proves accurate will depend heavily on the durability of any ceasefire and on how quickly Gulf states can expand infrastructure that is, by the U.S. government’s own estimates, still less than a third the size of the strait’s pre-war throughput. For now, the Treasury secretary’s remarks reflect an administration betting that the disruption of the past several months will permanently reshape how the world’s oil moves, rather than reverting to the routes that defined Gulf energy trade for half a century.