Saudi Arabia and the United Arab Emirates have opened new pipelines bypassing the Strait of Hormuz, the shipping lane that Iran has repeatedly threatened to close, in a move that will reduce Tehran’s power over oil markets.
The quiet opening of the pipelines comes amid heightened diplomatic tensions over Tehran’s nuclear program. Iran’s oil production has fallen to its lowest in more than 20 years due to the impact of US and European sanctions , prompting Tehran to repeat its threats to shut down the strait, the conduit for a third of the world’s seaborne oil trade.
The new links will more than double the total pipeline capacity bypassing the strait to 6.5m barrels per day, or about 40 percent of the 17 million bpd that transits Hormuz.
The geopolitical importance of the strait is such that Cyrus Vance, former US secretary of state, called it “the jugular vein of the West”. Over the weekend Ali Fadavi, naval commander in Iran’s elite Revolutionary Guard Corps, said Tehran had the ability to “not allow even a single drop of oil to pass” the strait.
Abu Dhabi and Riyadh say the pipelines are not a direct response to Tehran’s threats. But oil traders and scholars say they are clear counterweight.Page 1 of 3 | Next Page