The energy revolution named "Going Around Hormuz" is underway? The UAE accelerates its "breakthrough in energy exports beyond the Strait."

The UAE, a key oil-producing country in the Middle East, has sent positive signals regarding global energy supply. Anwar Gargash, a presidential advisor, stated on Monday that the UAE is accelerating the construction of alternative transport routes for energy exports and trade to ensure they are not "held hostage" by the ongoing US-Iran conflict. On September 1, US Treasury Secretary Janet Yellen said in a media interview that oil and gas pipelines in the Middle East, along with other port construction, would bypass the Strait of Hormuz "within two years," describing it as a "worthless body of water" by that time. The UAE's expansion of east coast ports, pipelines, and railways, along with Saudi Arabia's increased investment in Yanbu port's energy transportation infrastructure and oil and gas production capacity, echoes this strategy to weaken the Strait's constraints through alternative infrastructure. The ongoing conflict has significantly impacted Gulf Arab states, including the UAE, particularly after Iran launched missiles at the UAE and attacked its oil tankers in the Strait of Hormuz. "Our energy exports will not be held hostage, nor will our trade and economic activities," Gargash said at the Global Forum on Future Energy in Abu Dhabi. He emphasized repeatedly at the forum that the UAE has been expanding the throughput capacity of its east coast ports while developing pipelines, railways, and diversified trade routes beyond the Strait of Hormuz to establish alternative energy transport channels. While acknowledging that relations with Iran may eventually normalize, Gargash warned that rebuilding trust after attacks could take decades. He also criticized Gulf Arab states for failing to coordinate their response to Iran, stating they have not transformed their shared concerns into a unified geopolitical strategy. As the UAE sends positive signals to the energy market, global energy prices and transportation costs continue to rise. As of September 7 at 12:14 PM GMT, Brent crude oil was priced at $97.47 per barrel, and West Texas Intermediate crude was at $92.26; both had risen approximately 8% and nearly 10% respectively over the past week. Calculated with end-of-2025 settlement prices of $60.85 and $57.42 per barrel, they have increased by about 60.2% and 60.7% this year. The surge in marine fuel prices is even more pronounced: as of September 1, the price of Singapores very low sulfur fuel oil was nearing $825 per ton, up 76% since before the outbreak of the Iran conflict. This means shipping companies face both longer voyages and higher per-unit fuel prices, with cost pressures likely to continue from energy and shipping to imported goods and terminal transportation services. Strong employment reduces the Federal Reserve's concerns about a sudden deterioration in the labor market, while energy shocks heighten the importance of this weeks inflation data. In August, non-farm employment in the US increased by 162,000, with the unemployment rate holding at 4.1%; the August CPI will be released on Friday, September 11, just before the interest rate meeting on September 15-16. Wall Street financial giant Bank of America predicts a 0.22% month-on-month rise in core CPI, corresponding to a 0.24% increase in core PCE, along with an estimated year-on-year surge of 3.4% in overall CPI, suggesting that inflation trends may be sufficient to support a rate hike in September. Rising Risks in Both Straits: Soaring Oil Shipping Costs and Recurring Inflation Pressures The UAE is accelerating the construction of alternative export routes, focusing on reducing dependency on the Strait of Hormuz for energy revenues and trade activities. After the US and Iran mutually attacked oil tankers on September 5, the average daily passage of bulk carriers through the Strait of Hormuz fell to around 10 vessels within the subsequent ten days, marking the lowest level since May. In another critical aspect of the Middle East energy transport system, threats from the Iran-backed Houthis against Saudi shipping have similarly depressed traffic in the Red Sea: data from shipping tracking agency Ocean Data shows that the average daily passage through the Bab al-Mandab Strait dropped from 26.4 times in July to 21.7 times in August, a decrease of about 18%. Both passages are under pressure, putting exporters at risk of cargo being stranded and facing rising costs for alternative routes. The increase in tanker freight rates has been even more dramatic than the aforementioned rise in crude pricesexceeding twofold. Data from the Baltic Exchange indicates that the freight rate for the TD3C route from the Middle East Gulf to China, carrying 270,000 tons of crude oil, surged from WS216.89 in the report on February 27, prior to the conflict, to WS677.22 on September 3, an increase of about 212.2%; the corresponding equivalent daily earnings for round-trip time charters rose from $209,550 to nearly $704,000, a hike of approximately 236%. The latter figure represents daily earnings after deducting voyage costs. Detours further exhaust effective shipping capacitycalculations for July indicated that a journey from Saudi Yanbu to Taiwan via the Bab al-Mandab Strait originally took about 19 days, but when rerouted through the Suez Canal and around Africa, it extended to approximately 48 days, an increase of 29 days. Fuel costs rose from $1.26 million to $2.87 millionup about 127.8%along with an additional $1 million in Suez Canal fees. The lengthening of voyages, slowing turnover, and military risks have all contributed to rising transportation quotes. Merely relying on the alliance with the US is not sufficient. A spokesperson for the Qatari Ministry of Foreign Affairs expressed similar concerns at this policymaker forum, stating that Gulf Arab countries should not solely depend on a strategic partnership with the US for security. "Our Gulf states need to recognize that while having international forces stationed in the region and establishing a strategic alliance with the US is certainly important, it is not enough," Majid Ansari stated. "Achieving self-sufficiency in security is the only way out." Gargash believes that while the partnership with the US is crucial, the ongoing six-month conflict underscores the importance of a nation's own capabilities. "Our security is our top priority. When we are completely reliant on others, we cannot always assume it will also be their top priority," he stated at the forum. The Strait of Hormuz remains a pivotal negotiating issue. The alternative export capacity under the "off-Hormuz" model has become a strategic asset. Iran has fulfilled its threat to close the Strait of Hormuz, a channel that used to account for one-fifth of the world's energy supply. Disruptions in transportation have driven energy prices to spike, leading to a global economic crisis. In the US-Iran negotiations mediated by Qatar and Pakistan, the status of this waterway remains a core obstacle. Iran claims that the Strait belongs to Iran and Omanthis position is universally opposed by Gulf countries. "Freedom of navigation is not a concession that can be granted or a principle that can be renegotiated under pressure," Gargash stated. He added that any long-term solution must include credible guarantees to prevent Iran from attacking Gulf Arab states again. The conflict initiated by the US and Israel's strikes on Iran on February 28 remains at a stalemate. The preliminary ceasefire reached in June has collapsed, and efforts to restart the peace process have seen minimal progress. Signals released by Iran on September 6 pertain to both military deterrence and commercial route control: Secretary of the Supreme National Security Council Rezaei announced the establishment of a "no-go zone" extending from the US Navy blockade line to parts of the Persian Gulf, with vessels entering this zone to be placed on a sanctions list; the Speaker of the Iranian Islamic Consultative Assembly, Qalibaf, stated that future responses would be swifter and fiercer. Rezaei also previewed plans to sign an arrangement with Oman for vessel passage, with the signing of the agreement being next on Iran's announced agenda. These statements expand the uncertainty facing shipowners regarding route selection, sanction risks, and insurance underwriting conditions, increasing the difficulty of restoring normal commercial shipping. More direct signals regarding energy supply than the decline in navigation volume are the ongoing disruptions to large crude oil shipments. As of the report on September 7, data from Kpler indicated that no ultra-large tankers had exited the Strait of Hormuz since September 2; the UK Marine Trade Operations Office recorded 27 projectile attack incidents resulting in vessel damage in surrounding waters since July 6. The UAE's response is focusing on infrastructure development: the existing Habshan-Fujairah crude oil pipeline can transport up to approximately 1.8 million barrels per day, while the new West-East pipeline is scheduled to be operational by 2027, aiming to double export capacity via Fujairah. This pipeline will transport crude oil to a loading port outside the Strait, reducing dependence on navigating through Hormuz; the expansion of ports, storage, and rail facilities further enhances trade options. The value of alternative transport channels derives not only from shipping revenues but also from their ability to mitigate export disruptions, delays in delivery, and revenue losses. However, Fujairah has also faced attacks; thus, the long-term security guarantees emphasized by Gargash are equally crucial for the stability of exports linked to the development of alternative routes.