The United Arab Emirates has built almost half of a second pipeline that will bypass the Strait of Hormuz, the CEO of Abu Dhabi National Oil (ADNOC) said. The new pipeline will double ADNOC's export capacity through Fujairaha port located on the Gulf of Oman, just outside Hormuz. According to the US Secretary of Energy, “we will witness a decline in the importance of the strait,” CNBC quotes.
The UAE accelerated construction of the project because of the war with Iran. The pipeline is scheduled to be launched in 2027. Saudi Arabia also bypasses the Strait of Hormuz, sending oil via pipeline to a Red Sea port.
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“Today, too much of the world's energy still flows through too few bottlenecks,” said Sultan Ahmed Al Jaber, president of ADNOC, in an interview with the Atlantic Council.
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Iran blocks Hormuz. A billion barrels of oil were lost
Iran has been blockading Hormuz since early March, halting oil and gas exports from the UAE and other Arab producers in the Persian Gulf. The UAE has redirected some of its oil exports to Fujairah through an existing pipeline with a maximum capacity of 1.8 million barrels per day.
The blockade of the Strait of Hormuz has caused the most severe energy disruption in history, Al Jaber said. The president added that more than one billion barrels of oil were lost due to the closure of the strait. He added that every week that the Strait of Hormuz remains closed, another nearly 100 million barrels are lost.
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Blockade of the Strait of Hormuz. “Not just an economic problem”
Creation of 80 percent normal oil supply levels will take at least four months, even if the conflict ends immediately, Al Jaber said. He added that full normalization of oil supplies will only occur in the first or second quarter of 2027.
“It's not just an economic problem” Al Jaber said. “In fact, it sets a dangerous precedent once we accept that one country can hold the world's most important waterway captive.”
USA on the blockade of Hormuz: there will be other paths
US Energy Secretary Chris Wright said on CNBC on Friday that the Strait of Hormuz's importance to the global energy market will decline after the war with Iran as Gulf countries build more pipelines to bypass it.
“It's a card that can only be played once.” Wright said of Iran's blockade of the strait. “There will be other paths for energy from the Persian Gulf”.
“We will see a decline in the importance of the Strait of Hormuz, but not a decline in the importance of energy production and supplies by these countries,” he said.
Source: CNBC
