The United Arab Emirates said it was aiming to reduce its reliance on the Strait of Hormuz to “zero” after the war with Iran laid bare the vulnerabilities of the key waterway.
After the launch of Operation Epic Fury, Iran immediately moved to close the Strait of Hormuz, attacking shipping with drones and missiles, which caused shipping companies to halt nearly all transit through the waterway. Efforts over the next three and a half months failed to reopen the strait, triggering a global energy crisis and major economic damage to the UAE and the other Gulf states. The UAE announced plans to expand overland routes for oil and natural gas to bypass the strait during the war, but on Wednesday, UAE Minister of Foreign Trade Thani Al Zeyoudi told Bloomberg that it was moving to expand these routes to completely eliminate its reliance on the strait.
“We’re moving toward having zero Hormuz dependency and that’s regardless of whether it’s open or not,” he said. “It’s going to open and we hope that will happen quickly, but we will not stop the new plan.”
Zeyoudi’s comments reflect a further expansion of past moves the UAE made during the war. At a board meeting in May, Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed instructed the state-owned Abu Dhabi National Oil Company to fast-track the construction of a second pipeline to transport oil and liquified natural gas overland to ports in the east of the country, located beyond the strait. The West-East Pipeline is now expected to be completed sometime next year.
The UAE currently relies on a single pipeline to cross the strait — the Habshan-Fujairah pipeline — completed in 2012, and which can transport up to 1.8 million barrels per day. The UAE’s gas and oil-rich regions are located on the western side of the country, so most of its shipping naturally occurs in western ports such as Dubai. The 235-mile-long pipeline transports oil and gas through the desert to the port of Fujairah on the Gulf of Oman.
Under the OPEC quota, the UAE produced 3.2 to 3.6 million barrels per day — nearly all of which can be transported through the two oil pipelines once it’s complete. However, the country left the organization last month, and its new target for 2027 is around 5.2 million bpd. The increased production means the country will need to build a third pipeline to ship its full capacity overland, something Zeyoudi said will soon be underway.
The new infrastructure will cost billions of dollars, but likely less than the economic damage caused by the war. In addition to a halt in oil and gas exports, the UAE was targeted more than any country by Iranian missiles and drones, shattering its image as a safe oasis for business.
Zeyoudi told the outlet that the pipeline expansions will be accompanied by significant investment in new rail and road networks connecting the western oil and gas fields and facilities with eastern ports. Investments will also be made in the eastern ports of Dibba, Fujairah, and Khor Fakkan on the Gulf of Oman coast, while plans are underway for the construction of a fourth major harbor.
This will be accompanied by a significant investment in new pipelines, as well as rail and road networks, he said, projects that will improve connections between the eastern ports and the country’s oil and gas fields and petroleum facilities.
The UAE is unlikely to completely wean itself off the strait entirely, as it still relies on its major port in Dubai for container shipping. Products and resources outside of oil and gas are much costlier to transport by land.
The UAE’s role and strategic view of the region were completely upended by the war with Iran, pushing it to become a much more hawkish player. It advocated maximalist aims against Tehran during and immediately after the war, though signs have emerged in the past few weeks that it has softened its approach with the war’s costs in mind.
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Four sources told Reuters last week that the UAE agreed to release $10 to $20 billion in frozen Iranian assets, $3 billion of which has already been released, in exchange for Iran halting attacks against it. After the article was published, the UAE’s Foreign Ministry came out with a strong denial, calling the report “entirely false and unfounded,” but circumstantial evidence shows attacks against the country abruptly ceased in mid-May when the agreement was reported to have taken place, despite suffering the most Iranian attacks beforehand.
A Monday Financial Times report claimed that UAE President Sheikh Mohamed bin Zayed al Nahyan called Trump to plead with him against further strikes against Iran last week, another major departure from his previous hawkish stance.