UAE Says Hormuz-Bypass Pipeline Half-Built as Iran's Blockade Nears 1bn Barrels Lost

UAE Says Hormuz-Bypass Pipeline Half-Built as Iran's Blockade Nears 1bn Barrels Lost Abu Dhabi's second strait-bypassing line is nearly 50% complete as Iran's grip on the chokepoint keeps crude elevated and Gulf exports throttled. ADNOC's chief executive said on Wednesday (2026-05-20) that the United Arab Emirates has built nearly 50% of a second pipeline designed to bypass the Strait of Hormuz, the clearest sign yet that Gulf producers expect Iran's grip on the waterway to outlast any near-term deal. Sultan Ahmed Al Jaber said "too much of the world's energy still moves through too few chokepoints."^3,2 The strait is not reopening on schedule. Iran has officially agreed to allow safe passage, but Argus Media reports maritime traffic remains at a near-standstill, held up by insurance hurdles and new transit demands rather than any physical closure, with the blockade now approaching its eleventh week.^5,2 The lost supply is substantial. Al Jaber said more than 1 billion barrels of oil have been kept off the market since the closure, with nearly 100 million additional barrels lost every week it stays shut.³ Before the war, roughly 20% of the world's oil and seaborne gas moved through Hormuz.² Yet the price reaction has cooled. ICE Brent crude front-month traded near $94.64 on Monday (2026-06-08), down 2.24% on the day, with NYMEX WTI front-month off 3.00% at $91.66.⁴ The market is pricing a chokepoint that disrupts but has not severed Gulf flows, and traders have grown wary of chasing headlines without fresh military signals.⁴ The new feature of this crisis is monetisation. Iran is reportedly demanding transit fees of up to $2 million per ship, payable in cryptocurrency or Chinese yuan, according to figures cited via Argus.⁵ US, UK and Israeli-affiliated vessels face insurance premiums as high as 5%, which on a $150m tanker means up to $7.5 million in cover for a single voyage.⁵ Those are not the economics of a closed strait. They are the economics of a tollbooth.⁵ Iran has little incentive to reopen the waterway quickly, a Poten & Partners executive told Montel, because its grip on Hormuz ripples through global energy markets to Tehran's advantage.¹ As long as the chokepoint stays constrained, Iran extracts both revenue and leverage in talks with Washington.¹ For the UAE, the calculation runs the other way. Abu Dhabi has redirected some crude through an existing pipeline to Fujairah, which tops out at 1.8 million barrels per day, and now says the second line will be finished by next year.^3,2 That timeline signals the UAE is planning for disruption to persist well beyond the current standoff.² The diplomatic track offers little comfort. Oil rose on Tuesday (2026-05-19) after US-Iran negotiations reached a deadlock, with Tehran demanding an immediate end to the economic siege and guarantees securing freedom for Iranian oil exports.⁴ Those are maximalist terms, suggesting Iran intends to trade the strait for sanctions relief, not concede it.⁴ The muted price action still rewards scepticism. ICE Brent crude front-month below $95 with a billion barrels reportedly off the market implies traders either doubt the supply-loss figures, which come from a single Gulf source promoting its own pipeline, or believe buyers have found enough workarounds to cap the premium.^3,4 The risk is asymmetric. If the toll-and-insurance regime hardens into a durable system, the market can adapt and price a premium without panic, but any move toward wider military escalation between Washington and Tehran would reprice oil violently from a base that has already drifted lower.⁴ Watch whether maritime traffic through Hormuz actually picks up despite Iran's formal agreement to reopen⁵, and the pace of ADNOC's second pipeline, the most concrete bet anyone in the Gulf is making on how long this lasts.³