Is the energy revolution called “Go to Hormuz” taking place? UAE accelerates “breakout in energy exports outside the straits”

The Zhitong Finance App learned that the UAE, an important oil producer in the Middle East, has sent a positive signal about global energy supply. The country's presidential adviser Anwar Gargash said on Monday that the UAE is speeding up the construction of alternative transportation channels for energy exports and trade to ensure that they are not “held hostage” by the ongoing war between the US and Iran. US Treasury Secretary Bessent said in an interview with the media on September 1 that the construction of the Middle East oil and gas pipelines and other ports will bypass the Strait of Hormuz “within two years,” and even called it “worthless waters” at that time. The UAE's expansion of ports, pipelines, and railways on the east coast, and Saudi Arabia's increased layout of the Yanbu port's energy transportation infrastructure and oil and gas production capacity are in line with this idea of weakening strait restrictions through alternative infrastructure.

After Iran fired missiles into the UAE and attacked its oil tankers in the Strait of Hormuz, the conflict has had a major impact on the Arab countries of the Gulf, including the UAE. “Our energy exports will not be hijacked, and neither will our trade and economic activities,” Gargash said at the Sealy Forum in Abu Dhabi. He emphasized many times at the forum that the UAE has been expanding the throughput capacity of East Coast ports while developing pipelines, railways, and diversified trade routes beyond the Strait of Hormuz to build alternative energy transportation channels.

Despite admitting that relations with Iran might eventually be restored, Gargash warned that it could take decades to rebuild trust after the attack. He also criticized the Gulf Arab countries' failure to coordinate their response to Iran, saying that these countries failed to translate common concerns into a unified geopolitical strategy.

While the UAE is sending positive signals to the energy market, rising global energy prices are still compounded by rising transportation costs. As of 12:14 GMT on September 7, Brent crude oil was reported at 97.47 US dollars per barrel, and US West Texas Intermediate crude was reported at 92.26 US dollars; the two were up about 8% and nearly 10% respectively in the previous week. Based on the settlement prices of 60.85 US dollars and 57.42 US dollars per barrel at the end of 2025, it has increased by about 60.2% and 60.7%, respectively, since this year. The rise in marine fuel was even more prominent: as of September 1, the price of ultra-low sulphur fuel oil in Singapore was close to US$825 per ton, up 76% from before the outbreak of the war in Iran. This means that shipping companies simultaneously bear longer flight ranges and higher fuel prices per unit, and cost pressure may continue to spread from energy and shipping to imported goods and terminal transportation services.

Strong employment reduced the Fed's concerns about a sudden deterioration in the labor market, while energy shocks raised the importance of this week's inflation data. Non-farm payrolls in the US increased by 162,000 in August, and the unemployment rate remained at 4.1%; the CPI for August will be announced on Friday, September 11, close to the September 15-16 interest rate meeting. Wall Street financial giant Bank of America predicts a 0.22% month-on-month increase in core CPI, a 0.24% increase in the corresponding core PCE, and a sharp 3.4% year-on-year increase in overall CPI, believing that inflation performance may be sufficient to support the September rate hike.

Risks in the Double Straits are heating up: oil transportation costs are soaring, inflationary pressure is once again

The UAE is speeding up the construction of alternative export channels. The core is to reduce the dependence of energy revenues and trade activities on strait navigation. After the US and Iran attacked oil tankers again on September 5, in the 10 days up to September 6, only about 10 commodity carriers passed through the Strait of Hormuz every day, falling to the lowest level since May.

Another aspect of Red Sea energy transportation, which is critical to the Middle East energy transportation system, is also depressing traffic due to the threat of an Iran-backed Houthi blockade against Saudi shipping: observable samples of ocean data from ship tracking agencies showed that the average number of daily passes through the Mander Strait fell from 26.4 in July to 21.7 in August, a drop of about 18%. The two channels are under pressure at the same time, causing exporters not only to face the risk of goods being stranded, but also to the rising cost of alternative routes.

Compared to the pre-war increase in tanker freight rates, the increase in crude oil prices described above is even more exaggerated — it has more than tripled. According to data from the Baltic Sea Exchange, the freight rate for the Middle East Gulf to China TD3C route, which carries 270,000 tons of crude oil, rose from WS216.89 in the weekly report on February 27 before the war to WS677.22 on September 3, with a cumulative increase of about 212.2%; the corresponding round-trip equivalent rental income rose from US$209,550 per day to close to US$704,000, an increase of about 236%. The latter is the converted daily income after deducting the cost of the voyage.

The detour further consumes effective capacity — According to the July voyage estimates, it took about 19 days from Saudi Arabia to Taiwan via the Strait of Mander, and increased to about 48 days, or 29 more days after switching to the Suez Canal and detouring Africa; fuel costs rose from 1.26 million US dollars to 2.87 million US dollars, an increase of about 127.8%, and an additional 1 million US dollars for the Suez Canal. Extended flight range, slow turnover, and military risks have all boosted transportation prices.

Alliances with the US alone are not enough

A spokesman for Qatar's Ministry of Foreign Affairs expressed similar concerns at this forum of policymakers, saying that the Gulf Arab countries should not rely solely on a strategic partnership with the US to ensure security.

“We the Gulf countries need to recognize that the presence of international forces in the region and the establishment of a strategic alliance with the US is important, but this is not enough,” Majid Ansari said.

“Achieving self-sufficiency in terms of safety is the only way forward.”

Gargash believes that although the partnership with the US is critical, this six-month conflict highlights the importance of the country's own capabilities.

“Our safety is our top priority. When we are completely dependent on others, we can't always assume that this will also be their top priority.” He said on the forum.

The Strait of Hormuz is still the crux of negotiations, and the alternative export capacity of the “to Hormuz” model has become a strategic asset

Iran has fulfilled its threat to close the Strait of Hormuz. This strait was once a transportation channel for one-fifth of the world's energy supply. Transportation disruptions have boosted energy prices and triggered 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 Oman — a position widely opposed by the Gulf countries.

“Freedom of navigation is not a concession that can be given, nor is it a principle that can be renegotiated under pressure,” Gargash said. He added that any long-term solution must include credible guarantees to prevent Iran from attacking the Gulf Arab countries again.

The conflict, which started when the US and Israel launched an attack on Iran on February 28, is still at an impasse. The initial cease-fire reached in June has broken down, and there has been little progress in efforts to restart the peace process.

The signal released by Iran on September 6 involves two levels: military deterrence and commercial route control: Iran's Supreme National Security Council Secretary Rezai announced that the “restricted zone” will be extended from the US Navy blockade line to part of the Persian Gulf and that ships entering it will be included in the sanctions list; Islamic Parliament Speaker Kalibaf said that future responses will be more rapid and intense.

At the same time, Rezai also announced that he will sign a ship traffic arrangement with Oman. The signing of the agreement is still the next step announced by Iran. These statements extend the uncertainty faced by shipowners to route choices, risk of sanctions, and insurance coverage conditions, making it more difficult for commercial transportation to return to normal.

A more direct signal of energy supply than the decline in navigation volume is that large-scale crude oil transportation continues to be blocked. As of the September 7 report, Kepler data showed that no oversized tankers had left the Strait of Hormuz since September 2; the British Office of Maritime Trade Operations recorded 27 projectile attacks in surrounding waters that caused ship damage since July 6.

The UAE's response is on infrastructure construction: the current Habshan-Fujairah crude oil pipeline can transport up to 1.8 million barrels per day, and the new West-East pipeline is scheduled to be put into operation in 2027, with the goal of doubling the export capacity through Fujairah. Pipelines carry crude oil to shipping ports outside the strait, reducing export dependency on transit through Hormuz; port, storage and transportation facilities, and railway expansion further increase trade options. The value of alternative transportation routes comes both from transportation revenue and from the ability to reduce export disruptions, delayed deliveries, and loss of revenue. However, Fujairah has also been attacked before, so the long-term security that Gargash emphasized is also related to export stability as the construction of an alternative route.