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UAE builds Hormuz bypass as Iraq and Saudi ready 2027 output surge
Three major Gulf producers plan to boost exports despite the Strait of Hormuz blockade now in its 11th week.
Abu Dhabi National Oil Co. has built nearly 50% of a second oil pipeline to bypass the Strait of Hormuz, ADNOC chief executive Sultan Ahmed Al Jaber said on Wednesday (2026-05-20), with completion and a doubling of Fujairah's export capacity targeted for 2027.2
The blockade was approaching its 11th week by late May (2026-05-21), having already throttled a waterway that carried 20% of the world's oil and seaborne gas before hostilities between the United States and Iran began. Al Jaber put the cumulative supply loss at more than 1 billion barrels of oil. Nearly 100 million additional barrels are forfeited every week the strait stays shut. Energy prices soared across crude, products and gas markets after the closure.1,2
Even if hostilities ended immediately, Al Jaber said it would take at least four months to ramp flows back to 80% of normal levels. Any diplomatic resolution would not produce rapid market relief against that scale of accumulated loss.2
The UAE is not waiting. It already reroutes some crude through an existing pipeline to Fujairah, which has a maximum capacity of 1.8 million barrels per day.2 Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed Al Nahyan had already signaled an accelerated construction timeline on Friday (2026-05-15); the second pipeline, when complete, will push Fujairah's total export capacity substantially higher.3
That infrastructure push sits alongside a broader Gulf production strategy. Iraq and Saudi Arabia are both preparing significant output increases for 2027, though specific volumetric targets were not disclosed. All three producers share the same constraint: routing larger crude volumes to buyers while the Gulf's main export artery remains closed.1
The UAE announced on Tuesday (2026-05-19) that it would leave OPEC and OPEC+ effective May 1, 2026. As the cartel's third-largest producer, Abu Dhabi had already been exceeding its agreed production quotas before the exit; departure removes the supply cap on its output plans. Analysts described the withdrawal as a calculated strategic step rather than a sudden shift.4,5
The departure deepens a running feud with Saudi Arabia. The historical parallel is to the Yom Kippur war era, when OPEC Arab states imposed an embargo that permanently redirected global oil trade routes. Fujairah's shift from regional storage hub to primary export gateway echoes that earlier reshaping, though the driver this time is security rather than political solidarity.6
ICE Brent crude front-month traded at $84.62 as of Thursday morning (2026-07-16), up 0.11% on the session. Dubai crude, the benchmark most directly exposed to Gulf supply disruption, sat at $74.64. [LIVE PRICES]
Whether Iraq and Saudi Arabia can solve the same routing problem before their 2027 output plans require it is the constraint traders are watching. Both countries' export capacity rests on a strait that, as of late May (2026-05-21), remained closed for the 11th consecutive week with no resolution announced.1