The United Arab Emirates has unveiled plans to complete a new oil pipeline bypassing the Strait of Hormuz by next year, a strategic move aimed at safeguarding its crude exports from potential disruptions. This development comes as the blockade of the crucial waterway, which previously facilitated 20% of the world’s oil and seaborne gas before the onset of the Iran war, stretches into its 11th week, causing global energy prices to spike and affecting Gulf economies.
Abu Dhabi’s crown prince, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, has instructed the UAE state oil company to expedite this previously undisclosed project. The pipeline is set to transport oil from the emirates to the port of Fujairah by 2027, doubling the export capacity of the existing Habshan-Fujairah pipeline, which currently handles up to 1.8 million barrels a day to the Gulf of Oman port.
The UAE’s reliance on the current pipeline has been vital in maintaining oil exports since Iran began blocking tanker passage through the Strait of Hormuz following US and Israeli attacks on February 28. Notably, the UAE and Saudi Arabia are the only Gulf nations with pipelines that bypass the narrow strait, which runs between Iranian and Omani territories.
The accelerated development of this second pipeline follows the UAE’s recent decision to leave OPEC after 60 years, signaling a rift with Saudi Arabia, OPEC’s de facto leader. The departure is anticipated to enable the UAE, OPEC’s third-largest oil producer, to increase oil production beyond future group quotas, should the conflict persist or a peace plan fail to restore normal tanker flows through the strait.
While the exact capacity of the new pipeline remains undisclosed, doubling the current capacity to 3.6 million barrels a day would substantially close the gap with Saudi Arabia’s capacity, which can transport about 7 million barrels a day to the Red Sea port of Yanbu, with 5 million barrels for export. This move also highlights the underlying tensions between Abu Dhabi and Riyadh, with the latter typically advocating for strict production limits to maintain high oil prices in support of its economic goals.
