In a move to reduce reliance on shipping chokepoints on the Strait of Hormuz, the United Arab Emirates will double its crude oil export capacity, bypassing the troubled major shipping route by next year.
Bloomberg in a report divulged that Abu Dhabi National Oil Co. is accelerating the construction of a pipeline that runs to the port of Fujairah on the Gulf of Oman, according to a statement from the emirate’s media office posted on X.
The company already operates a 1.5 million barrel-a-day conduit from its oil fields to the port on its eastern coast, which has proved to be a lifeline during the Middle East conflict.
The existing pipeline has helped the UAE continue to supply markets, offsetting the hit to oil revenue as Iran practically shut the normal route through Hormuz soon after the war began in late February. Adnoc had already been planning the pipeline expansion as the current link can carry less than half of its normal export volumes.
“The project gains new significance in the context of the Hormuz crisis, but the logic behind it predates the war. “The core strategic objective is clear: reducing dependence on the Strait of Hormuz,” said Carole Nakhle, chief executive officer of energy consulting firm Crystol Energy Ltd.
Iran’s closure of the strait, through which about a fifth of the world’s daily supply of oil and gas normally flows, has thrown economies into turmoil and upended shipments of products like metals, fertilizer and plastics.
The US has been imposing its own blockade for the past month aimed at halting shipments to or from Iranian ports.
The UAE and Saudi Arabia are the only major Gulf producers able to get significant quantities of crude to market during the war. State oil companies of both countries have quietly managed to ship some cargoes out of the Gulf in recent weeks, avoiding the Iranian blockade.
Accelerating the pipeline’s construction also follows the UAE’s decision to exit the Organisation of Petroleum Exporting Countries.
