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Till six months ago, it was very easy for Gulf countries to sell oil. Extract oil at the lowest cost, transport it to the world through the Strait of Hormuz and sell it to the countries paying the highest price. But this model has changed after the war with Iran.
Oil transportation through the Strait of Hormuz continued to be affected following the US and Israeli attacks on Iran on February 28. Due to the threat of sea mines, missile and drone attacks, the blockade of America and Iran and increased insurance costs, the crude oil passing through this route every day has decreased from 20 million barrels to 37 lakh barrels.
For this reason, many Gulf countries including Saudi Arabia, UAE and Kuwait are now trying to reduce their dependence on Hormuz. New pipelines are being laid, the capacity of old lines is being increased and oil storage is being created in Asia.
Work is going on day and night at Fujairah Port of UAE. New pipelines and other facilities are being built here, with the help of which oil can be exported by bypassing the Strait of Hormuz.
UAE wants all oil to be exported without passing through Hormuz
The biggest example of this change is UAE. The business of this country is largely dependent on trade and sea routes. But the Hormuz crisis had the biggest impact on him. Therefore, now it is preparing such new routes from where trade and oil export does not depend on the Strait of Hormuz.
For this, the work of the second oil pipeline is going on at a fast pace in Fujairah situated on the banks of the Gulf of Oman. The pipeline will directly connect Abu Dhabi’s oil fields to Fujairah, eliminating the need for tankers to pass through Hormuz.
After the completion of the project, UAE’s capacity to export oil by bypassing the Strait of Hormuz will increase to 36 lakh barrels per day. This means that almost all of Abu Dhabi’s onshore oil can be sent directly to international markets without entering the Strait of Hormuz.
Onshore oil means crude oil extracted from an oil field located on land. In contrast, offshore oil is extracted from oil wells built under the sea.
UAE is busy in making not only oil but also gas business safe. Its government company ADNOC has announced to invest $ 8.2 billion in natural gas projects. There is also a plan to build a new LNG export terminal on the east coast, so that future gas exports will be less dependent on the Strait of Hormuz.
UAE government company ADNOC has this week announced an investment of $ 8.2 billion to expand its natural gas business.
Saudi made a new route to the Red Sea
Following the increasing threat in the Strait of Hormuz, Saudi Arabia has rapidly increased the use of its 1,201 km long East-West Pipeline. Built during the Iran-Iraq war in the 1980s, the pipeline connects the country’s eastern oil fields to Yanbu Port on the Red Sea.
Now Saudi Arabia is sending 7 million barrels of crude oil every day through the Red Sea to the world markets through this pipeline. The government is preparing to further increase its capacity by 10 to 20 lakh barrels per day. Work is also going on to build a parallel new pipeline for refined petroleum products.
Kuwait and Iraq are also looking for new paths
Kuwait is discussing a pipeline with Saudi Arabia and other Arab countries that could link its oil fields to ports in the Red Sea or Oman.
At the same time, Iraq and Jordan have restarted the pipeline project which was stalled for many years. Through this, up to 1 million barrels of oil can be sent to Aqaba port on the Red Sea every day. Iraq is also speeding up repairs on a damaged pipeline running from Kirkuk to Syria’s Mediterranean coast.
Also accumulating oil in India, Japan and South Korea
The strategy of Gulf countries is not limited to just building new pipelines. They are also creating additional oil storage in countries like India, Japan and South Korea. So that if the Strait of Hormuz is completely closed in the future, oil will already be present outside it and the supply will not stop.
Even new roads are not completely safe
However, the option of Hormuz is also not completely safe. More Saudi oil now flows through the Red Sea and the Bab al-Mandeb Strait, where Yemen’s Houthi rebels are increasingly attacking ships. This week, six people died in an attack on a ship in the Red Sea.
Experts believe that the Gulf countries will definitely reduce their dependence on Hormuz, but will not be able to leave it completely. Carol Nakhle, chief of Cristol Energy, says, “The benefits of the Strait of Hormuz are too great to be completely replaced. But it is no longer possible to rely solely on it.”
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