The United Arab Emirates has said it will complete a second oil pipeline that avoids the Strait of Hormuz by 2027, as tensions in the region continue to shake global energy markets.
The move comes as the blockade around the Strait of Hormuz nears its 11th week. Before the Iran war began, nearly 20% of the world’s oil and gas transported by sea passed through this narrow waterway. Since the disruption started, oil prices have jumped sharply, and economies across the Gulf have been feeling the pressure.
What is the new pipeline?
The new project is part of the UAE’s effort to reduce dependence on the Strait of Hormuz, the narrow waterway between Iran and Oman that carries a huge share of the world’s oil shipments. The project is known as the West-East Pipeline. It will run alongside the UAE’s existing Habshan-Fujairah pipeline, also called ADCOP.
That pipeline already transports oil from the huge Habshan oil fields in Abu Dhabi to the eastern port city of Fujairah on the Gulf of Oman. Stretching nearly 380 kilometres, or around 235 miles, across the desert, it allows the UAE to export oil without depending entirely on the Strait of Hormuz.
Right now, the existing pipeline can transport up to 1.5-1.8 million barrels of oil every day. The second pipeline is expected to double that export capacity. Once both lines are fully operating, the UAE should be able to move around 3.6 million barrels of oil a day directly to Fujairah without needing to use the Strait of Hormuz at all. The pipeline is already being built, and Abu Dhabi wants it completed by 2027, according to CNBC.
Which countries will benefit the most?
The project is not just important for the UAE. Many countries that depend heavily on Gulf oil could benefit if exports become more stable. Asian economies are expected to gain the most. Countries like India, China, Japan, and South Korea buy huge amounts of oil from the Gulf region.
India and the UAE already share strong ties in trade, energy, and security. The UAE is one of India’s biggest crude oil suppliers and currently provides around 9-10% of India’s total crude imports.
India relies heavily on imported oil for petrol, diesel, and petrochemical needs. So, a steady and secure flow of crude is extremely important for the country. More stable oil routes could also help Europe and even parts of the United States by calming global markets and reducing panic over supply shortages.
Fujairah pipeline is the biggest advantage
One of the most important parts of this story is the Habshan-Fujairah pipeline, also known as the Abu Dhabi Crude Oil Pipeline or ADCOP. The pipeline was built specifically to bypass the Strait of Hormuz. Completed in 2012 at a cost of nearly $4 billion, the 48-inch pipeline can currently carry around 1.5 million barrels of oil a day, though some reports say it can handle up to 1.8 million barrels daily.
Indian refiners have already been increasing imports routed through Fujairah whenever there were disruptions near Hormuz. Fujairah now has huge storage tanks, bunkering facilities, and a deep-water port. Since it lies outside the Gulf, it is considered much safer during periods of regional tension.
UAE’s OPEC exit adds to tensions with Saudi Arabia
The announcement also comes only weeks after the UAE left OPEC after being part of the group for 60 years. The decision was widely seen as a sign of growing tensions between Abu Dhabi and Riyadh. Saudi Arabia, which has long been the dominant voice inside OPEC, usually supports tighter oil production limits to keep prices high.
The UAE, however, appears eager to increase its oil production once conditions improve. From May 1, the UAE is no longer tied to OPEC’s production limits and can increase oil output based on its own plans and market demand.
Reports suggest the country can almost immediately increase output by around 1 million barrels a day.
Gulf countries are looking for safer routes
Other Gulf nations are closely watching what the UAE is doing. Saudi Arabia already has alternative pipelines that allow some oil exports to bypass the Strait of Hormuz. But the current crisis has pushed many countries in the region to think more seriously about reducing dependence on one narrow sea route.
The second pipeline would also protect the UAE if the regional conflict continues for a longer period than expected.
Even if a peace agreement is reached, there are concerns that tanker movement through the Strait of Hormuz may not fully return to normal anytime soon. By expanding its pipeline network, the UAE would still be able to push ahead with plans to increase exports.