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Iraq, UAE reroute oil
Iraq and the United Arab Emirates are fast-tracking alternative oil pipeline routes to replace capacity lost by the closure of the Strait of Hormuz, after new data highlighted their dependency on the Persian Gulf.
“Both Iraq and the United Arab Emirates are moving to reduce their dependence on the Strait of Hormuz for oil exports, through strategies focused on diversifying export routes and systems and strengthening maritime and land infrastructure”
The Iraqi cabinet approved plans to accelerate crude exports through the Kurdistan-Turkey pipeline network, which would more than triple shipments from 220,000 barrels per day to 770,000, routing exports via Turkey’s Mediterranean port of Ceyhan.
CNBC reported that QuantCube Technology data shows Iraq’s overall exports have “virtually dried up since the war began,” tying the shortfall to geographical dependence on Hormuz.
Iraq announced in a press conference on May 16 that it had exported 10 million barrels of oil through the Strait of Hormuz in April, down from 93 million before the war began.
Meanwhile, Abu Dhabi is fast-tracking construction of a new West-East pipeline to Fujairah, expected to come online in 2027 and to double the Abu Dhabi National Oil Company (ADNOC) export capacity.
QuantCube and officials
QuantCube senior economist Alan Lemangnen told CNBC, "Iraq is in a much more complicated situation because we know that most, if not all of its oil, transits through Hormuz," framing the rerouting push as a response to chokepoint risk.
CNBC also reported that Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan on May 15 called for faster delivery of the pipeline to meet rising global energy demand.
The UAE’s construction drive is tied to a broader effort to bypass the Strait of Hormuz chokepoint via the port of Fujairah, which is located on the Gulf of Oman beyond the strait.
CNBC said the UAE can still export oil through other terminals, easing the impact of the Hormuz closure, even as it warned that existing alternatives are at risk.
CNBC added that Saudi’s East-West pipeline was attacked by Iran in April, while Fujairah has also come under attack from Iranian drones, disrupting oil loading operations at its crude export terminal.
Capacity gaps and risk
Even with new routes, CNBC said the East-West pipeline linking processing facilities near the Persian Gulf to an export hub on the Red Sea, and the UAE pipeline to the port of Fujairah, have a combined estimated 3.5 to 5.5 million barrels per day (mb/d) of available capacity.
CNBC contrasted that figure with the roughly 20 million barrels of oil and petroleum products that transited through the Strait of Hormuz every day before the war, leaving flows well short of prewar levels.
The report said developing alternative export routes involves not only massive investment in infrastructure, but also time and transnational agreements when pipelines pass through several territories.
Lloyd’s List data cited by CNBC found traffic through the sea lane fell to the lowest point of the Iran war in May, while vessels stuck in the Gulf risk attack by Iranian forces unless they receive Tehran’s approval to transit a designated route through Hormuz.
CNBC warned that those vessels also risk U.S. sanctions if they cooperate with Iran, keeping the business stakes tied to security decisions around the waterway.
