The United Arab Emirates is set to enhance its oil export capabilities by completing a new pipeline that bypasses the Strait of Hormuz by next year. This strategic move aims to safeguard the nation’s crude exports from potential disruptions, amid the ongoing blockade of the critical waterway. The blockade, nearing its eleventh week, has contributed to soaring energy prices globally and has significantly impacted Gulf economies, as the strait previously facilitated 20% of the world’s oil and seaborne gas before the conflict with Iran.
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 project. The new pipeline will transport oil from the emirates to the port of Fujairah by 2027, effectively doubling the export capacity of the existing Habshan-Fujairah pipeline, which currently handles up to 1.8 million barrels per day. This development is crucial for the UAE, as it continues to export oil despite Iran’s blockade of tankers in the Strait of Hormuz, which followed US and Israeli attacks on February 28.
The UAE and Saudi Arabia stand out as the only Gulf nations with pipelines that allow crude exports outside the constrained waterway between Iran and Oman. The UAE’s decision to accelerate the construction of a second pipeline follows its recent withdrawal from OPEC after six decades, signaling a clear division with Saudi Arabia, the cartel’s de facto leader. Exiting the oil group was anticipated to enable the UAE, OPEC’s third-largest oil producer, to exceed the production quotas that might be imposed once the conflict resolves and normal trade through the strait resumes.
With the new pipeline, the UAE can advance its plans to increase oil exports, even if the conflict prolongs or a peace agreement does not fully restore tanker flow through the strait to pre-crisis levels. The UAE’s departure from OPEC has exposed longstanding tensions with Saudi Arabia, which traditionally supports strict production quotas to maintain oil prices that align with its economic goals. Although the exact capacity of the upcoming pipeline has not been revealed, doubling the current capacity to 3.6 million barrels per day would bring the UAE closer to Saudi Arabia’s pipeline export figures, which stand at approximately 7 million barrels daily, with 5 million barrels exported from its eastern oilfields to the Red Sea port of Yanbu.