The United Arab Emirates has announced plans to finalize a new oil pipeline by next year, circumventing the Strait of Hormuz to safeguard its crude exports from potential disruptions. The current blockade of this critical maritime passage, previously responsible for the transit of 20% of the world’s oil and seaborne gas, has persisted for nearly 11 weeks, causing global energy prices to surge and straining Gulf economies.
Abu Dhabi’s crown prince, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, has instructed the UAE’s state oil company to expedite the previously undisclosed pipeline project. This new infrastructure aims to transport oil from the emirates to the port of Fujairah by 2027, doubling the existing capacity provided by the Habshan-Fujairah pipeline, which currently handles up to 1.8 million barrels per day to the Gulf of Oman.
This development has been crucial for the UAE, enabling continued oil exports amid Iran’s blockade of tankers through the Strait of Hormuz following US and Israeli military actions on February 28. Presently, only the UAE and Saudi Arabia possess pipelines that allow crude exports outside the narrow waterway between Iranian and Omani territories.
The UAE’s decision to accelerate the second pipeline project follows its recent departure from OPEC after six decades of membership, highlighting a rift with Saudi Arabia, the group’s de facto leader. This move was anticipated to permit the UAE, the third-largest oil producer within OPEC, to exceed future production quotas that the cartel may impose once the conflict concludes and regular trade through the Strait of Hormuz resumes.
By constructing a new pipeline, the UAE positions itself to increase oil exports irrespective of the conflict’s duration or any peace agreements that may not fully restore pre-crisis tanker traffic through the strait. While the exact capacity of the new pipeline remains undisclosed, an increase to 3.6 million barrels daily would significantly enhance the UAE’s export capabilities, approaching those of Saudi Arabia, which can move approximately 7 million barrels daily from its eastern oilfields to the Red Sea port of Yanbu, with 5 million barrels designated for export.