In a strategic move to safeguard its oil exports, the United Arab Emirates (UAE) has announced plans to complete a new pipeline that will bypass the Strait of Hormuz by next year. This comes as the critical waterway, through which 20% of global oil and seaborne gas once flowed, remains blockaded for nearly 11 weeks due to ongoing geopolitical tensions involving Iran. The blockade has led to skyrocketing energy prices and has put a strain on the economies of Gulf nations.
The directive to expedite the pipeline project was issued by Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi. The state oil company has been tasked with fast-tracking the development, aiming for the pipeline to transport oil from the emirates to the port of Fujairah by 2027. This new pipeline is set to enhance the UAE’s export capabilities, effectively doubling the current capacity of the existing Habshan-Fujairah pipeline, which currently facilitates the movement of up to 1.8 million barrels per day to the Gulf of Oman.
The UAE’s reliance on the Habshan-Fujairah pipeline has been crucial since Iran began obstructing tanker movements through the Strait of Hormuz following an attack by the US and Israel on February 28. At present, only the UAE and Saudi Arabia have pipelines that allow crude exportation beyond the narrow strait bordered by Iranian and Omani territories.
The urgency in advancing a second pipeline arises shortly after the UAE’s surprising exit from the Organization of the Petroleum Exporting Countries (OPEC) after six decades. This departure signifies a notable rift with Saudi Arabia, the cartel’s leading nation, and allows the UAE, OPEC’s third-largest oil producer, to potentially exceed future production quotas once the conflict subsides and regular tanker passage resumes through the strait.
While the specific capacity of the upcoming pipeline has not been disclosed, estimates suggest that doubling the current output to 3.6 million barrels per day would significantly bolster the UAE’s pipeline export capacity. This move would bring the UAE closer to matching Saudi Arabia’s pipeline capabilities, which can deliver approximately 7 million barrels daily from its eastern fields to the Red Sea port of Yanbu, with 5 million barrels designated for export. The UAE’s initiative to enhance its infrastructure reflects its ambition to continue ramping up oil exports, regardless of the duration of the current conflict or any future peace agreements that may restrict tanker movement in the region.