The United Arab Emirates has unveiled plans to complete a new oil pipeline bypassing the Strait of Hormuz by next year, aiming to safeguard its crude exports from potential disruptions. The ongoing blockade of this critical maritime passage, which previously facilitated 20% of the world’s oil and seaborne gas traffic before the Iranian conflict, has now persisted for nearly 11 weeks. This has led to a surge in global energy prices and a strain on Gulf economies.
In response, Abu Dhabi’s Crown Prince, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, has instructed the UAE’s state oil company to expedite the development of this previously undisclosed pipeline project. The new infrastructure is anticipated to start transporting oil from the emirates to the port of Fujairah by 2027. This pipeline is expected to significantly increase the UAE’s export capacity, complementing the existing Habshan-Fujairah pipeline, which currently carries up to 1.8 million barrels per day to the Gulf of Oman.
The existing pipeline has been vital for the UAE in maintaining its oil exports following Iran’s blockade of tankers through the Strait of Hormuz, a situation that arose shortly after attacks by the US and Israel on February 28. Currently, the UAE and Saudi Arabia are the only Gulf nations with pipelines that allow crude exports outside the narrow strait situated between Iranian and Omani territories.
This decision to accelerate the pipeline project follows the UAE’s recent departure from OPEC after six decades of membership, highlighting a growing rift with Saudi Arabia, the cartel’s de facto leader. Exiting the oil cartel is seen as a strategic move to enable the UAE, OPEC’s third-largest oil producer, to increase its oil output beyond what future group production quotas might permit, especially once the conflict subsides and normal trade through the Strait of Hormuz resumes.
Although the exact capacity of the new pipeline has not been disclosed, doubling the current capacity to 3.6 million barrels per day would edge the UAE’s pipeline export capabilities closer to that of Saudi Arabia. The latter can transport approximately 7 million barrels per day from its eastern oilfields to the Red Sea port of Yanbu, with 5 million barrels earmarked for export. The UAE’s strategic move to boost its pipeline infrastructure underscores its intent to enhance oil exports even if conflict persists or an eventual peace agreement fails to restore pre-crisis levels of tanker traffic through the strait.