UAE Sees New Pipeline Ready by 2027

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

A new pipeline that would avoid the Strait of Hormuz is 50% complete. Meanwhile, U.S. inventories were depleted heavily last week, data show.

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Dhanna-Fujairah Pipeline to Avoid the Strait

Another pipeline to take a land route to avoid the Strait of Hormuz could be ready for full-scale deliveries by next year, the head of the Abu Dhabi National Oil Company (ADNOC) said.

According to Industrial Info Resources data, ADNOC put $3 billion toward the Dhanna-Fujairah crude oil pipeline, a 310-mile artery that can avoid the Strait of Hormuz. Speaking at the Atlantic Council in Washington D.C. on Tuesday, Sultan Ahmad al-Jabar, the managing director of ADNOC, said the conflict in the Middle East shows how maritime trade is impacted by just a handful of chokepoints.

"That is exactly why the UAE made the decision more than a decade ago to invest in infrastructure that bypasses the Strait. And it is why we moved ahead with our second pipeline in 2025," he said. "Today it is already 50 percent complete, and we are accelerating delivery toward 2027."

Industrial Info Resources is tracking more than 800 operational crude oil pipelines across the Middle East, in addition to active and proposed projects like the Dhanna-Fujairah line. Readers can learn more from a detailed project report.

Iran has targeted the UAE heavily during the conflict, with the UAE's Barakah Nuclear Power Plant threatened by drone strikes over the weekend. Readers can learn more from a detailed plant profile.

Elsewhere, the UAE already had proposed a new pipeline called West-East, which could complement the Habshan-Fujairah crude oil pipeline. Saudi Arabia too can avoid the Strait of Hormuz, though none of them can make up for the 20 million barrels per day (bpd) that would normally move through the waterway. Readers can learn more from a detailed pipeline profile.

Conflict in the Middle East began in late February with joint U.S.-Israeli airstrikes on Iran. With few signs of a negotiated settlement, the Reuters news agency on Thursday reported that Iran maintains tacit control over the Strait of Hormuz.

The price for Brent crude oil, the global benchmark, was back in black Thursday after losses during the previous session triggered by comments from U.S. President Donald Trump that some sort of deal was in sight. After a 5% drop in the previous session, Brent was up more than 2% in pre-market trading Thursday to move near $107 per barrel.

By the Numbers

• 7.9 million-barrel drop in U.S. oil inventories
• 50% completion for a new UAE pipeline

U.S. Market Showing Shortages

Offsetting market shortages from the conflict is taking a toll. On Wednesday, the U.S. Energy Information Administration reported domestic crude oil inventories declined by 7.9 million barrels over the seven-day period ending May 15, compared to market expectations of 3.4 million barrels. Crude oil exports averaged 5.6 million bpd, an 11.6% increase from year-ago levels.

Inventories in the Strategic Petroleum Reserve, tapped to address global market issues, declined 9.9 million barrels for the largest weekly decline on record. Refinery issues are apparent in all but two of the PADD districts, meanwhile, with Chevron Corporation, Exxon Mobil Corporation and Marathon Corporation all reporting problems in PADD 3, which covers the Gulf Coast.

Elsewhere, The Conference Board on Wednesday said it was keeping its forecast for a 2.7% annual increase in global gross domestic product (GDP) for 2026, despite the headwinds from higher crude oil prices.

Advanced western economies, however, are performing below the pre-pandemic average, with U.S. growth this year pegged at 1.7%, compared to 2.4% over the 10-year period to 2019. Latin American growth over the period leading up to the COVID-19 pandemic was 1.7% on average, but it is expected to grow annually by 2.5% this year.

The European Commission on Wednesday downgraded its growth outlook, as it deals with the second major energy shock in five years.

"Moreover, outright supply shortages for specific commodities and inputs, for example some refined oil products, helium and fertilizers, could intensify with knock-on effects for global production chains and food affordability," a commission statement read.

Key Takeaways

• Pipelines won't be enough to solve the Strait of Hormuz energy crisis
• Global economy taking a hit from Middle East conflict

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).