Arab Emirates Ship First Oil Via Gulf of Oman Port

Alarmed by Iranian threats to close the Strait of Hormuz, the UAE open a new export terminal

Alarmed by Iranian threats to erect a blockade in the Persian Gulf, the United Arab Emirates loaded their first cargo on Sunday from a long awaited new export terminal on the Gulf of Oman. Connected to the emirates’ main oil and gasfields by an overland pipeline, the new facility should ultimately be able to process nearly two million barrels of oil per day.

Roughly 40 percent of the world’s seaborn oil transports and large quantities of liquefied natural gas from Qatar currently pass through the narrow Strait of Hormuz every day which provides access to the Persian Gulf. Iran has threatened to shut the strait if there is an American or Israeli air attack on its nuclear facilities. Western powers suspect that the Tehran’s enrichment program is designed to develop nuclear weapons.

The United States Navy, which has some thirty ships patrolling the Persian Gulf and nearby waters, should be able to break an Iranian blockade but not before oil prices and insurance rates have skyrocketed worldwide.

Rather than trying to prevent ships from transiting the Strait of Hormuz altogether, Iran would more likely harass unfriendly oil tankers with diesel submarines and shore batteries and thus make it nigh impossible for the fourteen supertankers that traverse it on average every day to deliver their oil and gas transports to East Asia and the West.

In anticipation of a blockade, the United Arab Emirates have rapidly completed the construction of a pipeline that is able to carry up 75 percent of their exports, nearly two millions barrels of oil per day, from the Habshan onshore oil and gasfield to Fujairah on the Gulf of Oman coast. The new terminal there also has eight crude oil storage tanks each with a capacity of one million barrels.

Even with the new pipeline and port facilities online, a blockade of the Strait of Hormuz could still deprive the developed world of some 75 percent of Gulf oil imports.

Iranian oil sales are largely prohibited by sanctions. Although the Islamic nation is still able to sell to China and India, which were among its main buyers before a European oil embargo took effect this month, the reduction in exports, and government revenue with it, may indadvertedly raise the prospect of an Iranian blockade when it doesn’t need access to Persian Gulf export routes itself anymore.