Key Points

As tensions with Iran continue, two major oil pipelines that bypass the strategic Strait of Hormuz are drawing global attention. Saudi Arabia’s East-West Pipeline and the UAE’s Abu Dhabi Crude Oil Pipeline (ADCOP), also known as the Habshan–Fujairah pipeline, could partially offset the impact of a blockade of the Strait of Hormuz. However, risks of attacks on energy infrastructure may limit the pipelines’ full operational capacity.

The effective closure of the Strait of Hormuz has thrust two alternative pipelines—one in Saudi Arabia and one in the UAE—into the spotlight. The first is Saudi Arabia’s East-West Pipeline (Petroline), which spans approximately 750 miles across the country, linking Abqaiq in the oil-rich eastern Gulf coast to the Red Sea port of Yanbu. Following recent expansion, the pipeline’s total design capacity is about 7 million barrels per day. Saudi oil giant Aramco stated earlier this week that the system is expected to operate at full capacity in the coming days. The second, smaller pipeline is the UAE’s Abu Dhabi Crude Oil Pipeline (ADCOP), also referred to as the Habshan–Fujairah pipeline. Stretching about 248 miles, it connects the Habshan onshore oil facilities to Fujairah, with a current capacity of around 1.5 million barrels per day and a reported total capacity nearing 1.8 million barrels per day.

Crucially, both pipelines offer alternative routes that avoid the Strait of Hormuz, which has been blocked since the U.S. and Israel launched strikes against Iran on February 28. Iran has retaliated by targeting vessels attempting to navigate the narrow passage, with multiple incidents reported recently. Energy analysts suggest that combined, the East-West Pipeline and ADCOP could help partially offset the shortfall from the Strait’s usual daily flow of nearly 20 million barrels. However, the risk of attacks on infrastructure remains an ongoing challenge amid the escalating Middle East crisis. Naven Das, senior oil analyst at global trade intelligence firm Kpler, said in an email to CNBC: “Saudi Arabia and the UAE have already increased utilization of pipelines that bypass the Strait.” “In the UAE, we estimate ADCOP’s 1.5 million-barrel-per-day pipeline is operating at 71% utilization, leaving about 440,000 barrels per day of spare capacity. If needed, ADNOC could temporarily raise throughput to 1.8 million barrels per day.” He added that the risk of attacks on energy facilities within the country could constrain that maximum capacity target. According to media reports citing unnamed sources, Abu Dhabi’s state-owned oil giant has shut its large Ruwais refinery due to a fire at a facility within the complex. CNBC has contacted an ADNOC spokesperson and is awaiting a response. The Ruwais refining complex in the UAE has a crude processing capacity of approximately 922,000 barrels per day. Pankaj Srivastava, senior vice president at energy research firm Rystad Energy, said in a research note: “As more crude becomes trapped in the Gulf, refineries may soon be forced to adjust operations, reducing run rates and directing output only to domestic markets if refined product exports are blocked.” “The UAE’s ADCOP allows crude exports to bypass the Strait of Hormuz via Fujairah, but refined products from the Ruwais complex still heavily rely on tanker routes through the Strait.” She added on Thursday, “Therefore, if maritime transport remains restricted, UAE refineries may still need to adjust refined product exports or manage inventory buildup.”

Impact on Energy Markets Oil prices have been highly volatile since the outbreak of hostilities with Iran last month: the global benchmark Brent crude surged to nearly $120 per barrel early this week before retreating to around $90. By Thursday morning, crude futures were trading near $100 per barrel following reports of another vessel attack in the Persian Gulf. “The longer the conflict lasts, the more inventories will build up, eventually leaving no choice but to cut production,” energy market analyst Sasha Foss told CNBC on Wednesday. He estimated that oil output in Iraq has fallen by as much as 70% due to the Iran conflict and warned that further shutdowns could push oil prices higher. “Once countries like Saudi Arabia and the UAE also start cutting output, that will really hit the global oil market hard,” Foss said.