The United Arab Emirates is set to complete a new oil pipeline that will circumvent the Strait of Hormuz by next year, a strategic move to safeguard its crude exports from potential disruptions. The current blockade of this critical maritime route, which previously facilitated the flow of 20% of the world’s oil and seaborne gas, is nearing 11 weeks. This situation has led to a surge in global energy prices and has put a strain on Gulf economies.
Abu Dhabi’s crown prince, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, has instructed the UAE state oil company to expedite the development of this previously undisclosed pipeline. The new infrastructure is anticipated to transport oil from the emirates to the port of Fujairah by 2027, effectively doubling the UAE’s export capacity via the existing Habshan-Fujairah pipeline, which currently has the capability to carry up to 1.8 million barrels per day to the Gulf of Oman.
This initiative comes in response to Iran’s blockade of tankers passing through the Strait of Hormuz following attacks by the US and Israel on February 28. The UAE and Saudi Arabia remain the only Gulf countries with pipelines that export crude outside this narrow channel between Iran and Oman. The decision to fast-track the construction of a second pipeline follows the UAE’s recent exit from OPEC after 60 years, highlighting a growing rift with Saudi Arabia, the group’s de facto leader.
By leaving OPEC, the UAE, which holds the position of the cartel’s third-largest oil producer, aims to increase its oil production beyond what future quotas might allow once the conflict ends and routine trade through the Strait of Hormuz resumes. The new pipeline could enable the UAE to boost its oil exports even if the conflict extends longer than anticipated or if a peace agreement does not fully restore the tanker traffic to pre-crisis levels. This underscores the ongoing tension between Abu Dhabi and Riyadh, with Saudi Arabia typically advocating for strict production limits to maintain oil prices that support its economic goals.
While the exact capacity of the new pipeline remains undisclosed, doubling the current capacity to 3.6 million barrels per day would significantly enhance the UAE’s pipeline exports, bringing them closer to Saudi Arabia’s level. Saudi Arabia can transport approximately 7 million barrels daily from its eastern oilfields to the Red Sea port of Yanbu, out of which 5 million barrels are exported. This development represents a strategic advancement for the UAE in its quest to expand its oil export capacity amid regional tensions.