The United Arab Emirates (UAE) is set to complete a new oil pipeline by next year, designed to circumvent the Strait of Hormuz, in a strategic move to safeguard its crude exports against potential disruptions. Currently, the blockade of this crucial maritime route, which previously facilitated the passage of 20% of the world’s oil and seaborne gas before the onset of the Iran war, is nearing its 11th week. This situation has led to a surge in global energy prices and has had a significant impact on the economies of the Gulf region.
Abu Dhabi’s Crown Prince, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, has instructed the UAE’s state oil company to expedite this previously undisclosed project. The aim is for the pipeline to be operational by 2027, enabling the transport of oil from the UAE to the port of Fujairah. This development is expected to enhance the UAE’s export capacity, doubling it through the existing Habshan-Fujairah pipeline, which currently carries up to 1.8 million barrels a day to the Gulf of Oman.
Since the blockade of the Strait of Hormuz by Iran, following the US and Israel’s attacks on February 28, the existing pipeline has been vital for the UAE to sustain its oil exports. Alongside Saudi Arabia, the UAE stands as one of the few Gulf producers with the infrastructure to export crude outside this narrow strait, bordered by Iranian and Omani territories.
The UAE’s decision to accelerate the construction of a second pipeline comes shortly after its exit from the Organization of the Petroleum Exporting Countries (OPEC), ending a 60-year membership. This move is seen as an indication of growing tensions with Saudi Arabia, OPEC’s de facto leader, which typically supports stringent production quotas to maintain favorable oil prices for economic objectives. By leaving the cartel, the UAE, the third-largest oil producer in the group, seeks the flexibility to increase oil production beyond future quotas once the conflict ends and normal shipping through the Strait of Hormuz resumes.
With the new pipeline, the UAE aims to boost its oil export capabilities even if the current conflict prolongs unexpectedly, or if a peace agreement falls short of restoring the pre-crisis tanker flow through the waterway. While the exact capacity of the new pipeline remains undisclosed, if doubled, it could reach 3.6 million barrels per day, drawing the UAE’s pipeline exports closer to Saudi Arabia’s capacity of about 7 million barrels daily from its eastern oilfields to the Red Sea port of Yanbu, of which 5 million barrels are exported.