New Delhi: The current situation in the Strait of Hormuz is extremely tense and unstable, as it has effectively become a frontline in the ongoing conflict
between Iran and the United States–Israel. Since late February, military strikes have disrupted shipping through the Strait, which carries roughly one-fifth of the world’s oil trade. Iran says the waterway is open to most countries but closed to ships linked to the US and Israel, which it considers “enemy vessels.”
Time for the Fujairah port?
While the Strait of Hormuz remains unstable, reports by Bloomberg and Reuters say that a day after being hit by drone debris and enduring a fire, the United Arab Emirates’ Fujairah port resumed its oil-loading operations. This is now being considered an alternative source and route for oil supplies, especially for Asia.
The Fujairah port is a major global hub for ship refuelling and for crude and fuel exports, located just outside the Strait of Hormuz, and is of great importance to the global oil market. According to Kepler data, Fujairah exported an average of more than 1.7 million barrels per day of crude oil and refined fuels last year. This is a volume equal to about 1.7 per cent of the daily world demand.
The port is thus extremely important, especially as it is located on the Gulf of Oman, approximately 70 nautical miles from the Strait of Hormuz. With Hormuz’s current closing with the war, the importance of the port grows manifold.
The UAE itself is a big player in the oil industry, and has produced more than 3.4 million bpd of crude before the war began. It operates a 1.5 million bpd pipeline that can transport some crude to bypass the Strait of Hormuz. Any disruption in Fujairah would force the UAE, OPEC’s third-largest crude producer, to shut down more production and it is important to thus keep it running to alleviate the effects of the closing of the Strait of Hormuz at this moment.
