The United Arab Emirates has unveiled plans to complete a new oil pipeline by next year, which will circumvent the Strait of Hormuz. This strategic move aims to safeguard future crude exports amid potential disruptions. Currently, a blockade of this crucial maritime route, which previously facilitated the flow of 20% of the world’s oil and seaborne gas, has entered its 11th week. This blockade has significantly driven up global energy prices and affected Gulf economies.
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 unannounced infrastructure project. The goal is for the new pipeline to start transporting oil from the UAE to the port of Fujairah by 2027. This pipeline is projected to double the UAE’s export capacity compared to 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 oil exports since Iran obstructed tankers passing through the Strait of Hormuz, following attacks initiated by the US and Israel on February 28. Within the Gulf region, only the UAE and Saudi Arabia have pipelines that allow crude exports outside this narrow passage bordered by Iranian and Omani territories.
The UAE’s decision to accelerate a second pipeline project follows its recent exit from OPEC after six decades of membership, highlighting a growing rift with Saudi Arabia, OPEC’s de facto leader. This departure is expected to provide the UAE, OPEC’s third-largest oil producer, with greater flexibility to exceed future production quotas once the current conflict concludes and normal operations through the Strait of Hormuz resume. However, the new pipeline would enable the UAE to increase oil exports even if the conflict prolongs or if a peace agreement does not fully restore tanker movements to pre-crisis levels.
This development exposes ongoing tensions between Abu Dhabi and Riyadh, as Saudi Arabia has traditionally supported strict production limits to maintain oil prices that support its economic goals. While the new pipeline’s exact capacity remains undisclosed, potentially doubling its capacity to 3.6 million barrels per day could significantly bolster the UAE’s position. This would bring UAE’s pipeline export capacity closer to that of Saudi Arabia, which transports approximately 7 million barrels per day from its eastern oilfields to the Red Sea port of Yanbu, with 5 million barrels designated for export.