UAE pipeline reshapes Gulf oil routing

Abu Dhabi’s push to build a crude export route outside the Strait of Hormuz has moved to the centre of Gulf energy security after ADNOC said its new West-East Pipeline is about halfway complete and on course to expand shipments through Fujairah by 2027.

The project, being fast-tracked under the direction of Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council, is intended to double ADNOC’s export capacity through Fujairah, giving the UAE greater operational flexibility at a time when maritime disruption has exposed the vulnerability of Gulf oil flows.

Sultan Ahmed Al Jaber, ADNOC managing director and group chief executive, said the pipeline had reached roughly 50 per cent completion. He also warned that global oil flows through disrupted routes could need at least four months after the end of the Iran war to recover to about 80 per cent of levels seen before the conflict, underscoring the scale of logistical, insurance and security barriers now facing shippers.

The Strait of Hormuz remains one of the world’s most important energy chokepoints, carrying a substantial share of seaborne crude and liquefied natural gas exports from the Gulf. Disruption since late February, following US-Israeli strikes on Iran, has forced refiners, traders and governments to reassess assumptions about supply security. Tehran has allowed only limited passage while keeping restrictions on most vessels, creating congestion, raising insurance costs and intensifying volatility in oil and fuel markets.

Brent crude has traded at elevated levels since the crisis began, with sharp intraday moves whenever shipping data indicates either renewed passage or fresh risk. Asian buyers remain especially exposed because the Gulf supplies a large share of crude to China, Japan, South Korea and other major importers. Higher energy prices have also complicated inflation management for central banks already balancing weak growth with persistent price pressures.

The new UAE pipeline is designed to transport crude from Abu Dhabi’s production areas towards Fujairah on the Gulf of Oman, outside the Hormuz bottleneck. Fujairah has become a strategic hub for storage, bunkering and export operations because ships leaving from the port do not need to transit the strait. The existing Habshan-Fujairah oil pipeline already gives the UAE partial bypass capacity, but the new West-East project is expected to significantly expand that cushion.

For ADNOC, the project is both an infrastructure upgrade and a geopolitical hedge. The company has been raising production capacity while pursuing long-term supply deals, international gas investments and downstream expansion. Greater access to Fujairah would strengthen its ability to meet contractual obligations even when Gulf shipping lanes are impaired, improving the UAE’s standing as a reliable supplier in periods of conflict.

The acceleration of the pipeline also fits Abu Dhabi’s wider effort to reinforce its role in global energy markets while maintaining investment in lower-carbon operations. ADNOC has promoted its upstream carbon intensity as among the lowest in the industry and has set a 2045 net-zero target for its own operations. Yet the Hormuz crisis has placed immediate energy security ahead of longer-term transition debates, showing that physical supply routes remain critical even as producers invest in cleaner technologies.

The broader market impact extends beyond crude. LNG shipments from Qatar and petroleum product flows across the Gulf have also faced higher risk premiums, affecting power generation costs and industrial users across Asia and Europe. Shipping companies have had to weigh route availability, crew safety, war-risk insurance and government advisories before entering the area. Some vessels have waited outside the Gulf, while others have taken limited passage under closely monitored conditions.

Diplomatic efforts involving Gulf states, Oman and Iran have sought to create a mechanism for safer navigation, but shipping confidence is unlikely to return quickly. Even if hostilities stop, insurers, charterers and port operators would need evidence that mines, drones, missiles and seizure risks have fallen materially. That explains ADNOC’s warning that flows may recover only gradually rather than snapping back once a ceasefire or political settlement is announced.