The United Arab Emirates will double its capacity to export crude oil bypassing the Strait of Hormuz by next year, as reported by Bloomberg. 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. Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed directed the Abu Dhabi National Oil Company (ADNOC) to fast-track the West-East Pipeline project during an executive committee meeting on Friday. The pipeline is under construction and expected to start operating next year, representing a significant acceleration from the previously announced 2027 timeline. This strategic expansion aims to reduce reliance on the shipping chokepoint whose closure during the Iran war has significantly disrupted global markets. The current blockade of the vital waterway, through which 20% of oil and seaborne gas flowed before the Iran war, is approaching the 11-week mark, sending energy prices soaring around the world and throttling Gulf economies.
The government-owned Abu Dhabi National Oil Co. currently operates a 1.5 million barrel-a-day pipeline from its desert oil fields to the port on the eastern coast, as reported by Business Standard. However, the existing Abu Dhabi Crude Oil Pipeline (ADCOP), also known as the Habshan-Fujairah pipeline, can carry up to 1.8 million barrels per day and has proven crucial as the UAE seeks to maximise exports from the Gulf of Oman coast, just outside the strait. The new pipeline is expected to double the UAE's export capacity via the existing Habshan-Fujairah pipeline, though the exact capacity of the new pipeline has not been disclosed. The current 252-mile (406-kilometer) pipeline to Fujairah hasn't itself been targeted in the war, but infrastructure at both ends of the route has sustained damage that's temporarily disrupted shipments in multiple attacks during the conflict. The Habshan–Fujairah pipeline, often referred to as the West–East crude oil pipeline, is one of the UAE's most significant strategic energy projects. Stretching more than 360km across the UAE, the 48-inch pipeline has the capacity to transport up to 1.5 million barrels of crude oil per day, representing a substantial share of the country's total oil exports.
The existing pipeline link can currently carry less than half of Adnoc's normal export volumes, according to Business Standard. This capacity constraint highlights the urgent need for the planned expansion to meet growing export demands. The UAE produced just under 3.4 million bpd in January before the war, but output more than halved after the effective closure of the Strait of Hormuz forced ADNOC to shut in some production. The UAE and Saudi Arabia are the only major Gulf producers able to get significant quantities of crude to market during the current conflict, as reported by Bloomberg. State oil companies of both countries have quietly managed to ship some cargoes out of the Gulf in recent weeks, successfully avoiding the Iranian blockade. The UAE's departure from OPEC after 60 years of membership was expected to allow the UAE, the group's third-largest oil producer, to pump more oil than the group's future production quotas may allow once the conflict ends and normal trade through the strait of Hormuz resumes. Abu Dhabi has targeted a capacity to produce 4.9 million BPD, with the UAE currently producing between 1.8 and 2.1 million barrels per day due to the war impact.
Since the outbreak of the Iran war, Tehran has significantly expanded its definition of the strait and the maritime area it claims control over. The Islamic Revolutionary Guard Corps (IRGC) Navy published a map on May 4 showing a new zone of control encompassing much of the UAE's Gulf of Oman coastline. That move coincided with a drone attack on an ADNOC tanker and a barrage on Fujairah's oil zone, which the UAE's foreign ministry called an "unacceptable transgression" and "economic blackmail." On Tuesday, the IRGC announced a further expansion, redefining the strait as a "vast operational area" stretching up to 300 miles (482.8 km) wide. Tehran has effectively shut the maritime chokepoint since the U.S. and Israel attacked Iran on February 28, disrupting about a fifth of global oil supplies. The US has been imposing its own blockade for the past month aimed at halting shipments to or from Iranian ports.
With the UAE now out of OPEC, it will be looking to get its money's worth from major oil-field expansions. Adnoc is set to boost capacity to 5 million barrels a day by next year, compared to when it could pump about 3 million barrels a day when first discussing that target in 2018. The expanded capacity of the two pipelines will likely exceed the volume of Murban that Adnoc can produce, meaning the company could use the new link to export its offshore grades from Fujairah. Crudes like Upper Zakum, produced at fields in the Gulf and exported from offshore terminals, are popular with refiners for their quality and often influence regional price levels. The new pipeline means the UAE could pursue its plan to ramp up oil exports even if the conflict continues for longer than expected, or an eventual peace plan stops short of allowing a free flow of tankers through the waterway to return to pre-crisis levels. The UAE's not alone in having a Hormuz workaround, as Aramco operates a pipeline running across Saudi Arabia to the Red Sea and is working to increase export capacity at its ports there. While both routes face attacks during the current conflict, the biggest Gulf producers are creating options and looking to future alternatives.
