The United Arab Emirates is set to finalize a new oil pipeline bypassing the Strait of Hormuz by next year, aiming to safeguard its future oil exports amid ongoing threats of disruption. Currently, the blockade of this crucial waterway, which once facilitated the flow of 20% of the world’s oil and seaborne gas prior to the Iran conflict, has lasted almost 11 weeks. This situation has led to skyrocketing energy prices globally and has significantly impacted Gulf economies.
Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, the crown prince of Abu Dhabi, has instructed the UAE state oil company to expedite the development of this previously undisclosed pipeline project. The new pipeline is projected to transport oil from the emirates to the port of Fujairah by 2027, effectively doubling the UAE’s export capacity via the current Habshan-Fujairah pipeline, which can carry up to 1.8 million barrels per day to the Gulf of Oman.
This new infrastructure is pivotal for the UAE as it continues its oil exports, especially after Iran’s blockade of tankers through the Strait of Hormuz, which followed the US and Israel’s attacks on February 28. The UAE and Saudi Arabia remain the only Gulf nations with pipelines that allow crude exports beyond the narrow waterway bordered by Iran and Oman.
The decision to accelerate the construction of a second pipeline follows the UAE’s recent exit from OPEC after 60 years, highlighting a growing rift with Saudi Arabia, the cartel’s de facto leader. Leaving OPEC opens the possibility for the UAE, the third-largest oil producer within the group, to increase its oil production beyond future quotas once the conflict ends and the Strait of Hormuz resumes normal operations.
While the exact capacity of the new pipeline hasn’t been revealed, doubling its current capacity to 3.6 million barrels per day would position the UAE’s pipeline exports closer to those of Saudi Arabia. Saudi Arabia currently transports approximately 7 million barrels daily from its eastern oilfields to the Red Sea port of Yanbu, with 5 million barrels being exported. This strategic move underscores the UAE’s intent to boost oil exports, regardless of the conflict’s duration or the terms of any future peace agreement regarding tanker passage through the strait.