The UAE will speed up the construction of a new oil pipeline to bypass the Strait of Hormuz, which remains closed as hostilities between the U.S. and Iran continue.
The country's government announced that the goal is to double the country's export capacity through Fujairah by next year.
Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed gave the direction to accelerate the project for the West-East Pipeline, according to the Abu Dhabi Media Office. The project is already underway and is expected to become operative in 2027.
Reuters detailed that the existing pipeline can carry up to 1.8 million barrels per day. The new maximum capacity would be above 3.5 million. The UAE is one of the two only countries with active pipelines allowing for substantial exports not involving tankers going through the Strait of Hormuz.
The production of oil in the Gulf has dropped significantly since the war began in late February. Saudi Arabia informed OPEC that its production of oil dropped more than 40% to its lowest level since 1990.
Bloomberg detailed that the cartel's monthly report showed that Saudi production fell by more than 650,000 barrels per day, clocking in at 6.316 million barrels per day. It is the lowest figure since the Gulf War in 1990 after Iraq's invasion of Kuwait.
The country went on to say that it has partially mitigated the impact of the Strait of Hormuz's closure by rerouting some exports through its east-west pipeline network.
The organization has said that, overall, oil production fell more than 30% since the beginning of the Iran war.
In its latest monthly update, OPEC also lowered its demand growth forecast for the year to about 1.2 million barrels per day, compared to 1.4 million from the last report.
The cartel's production dropped by 1.7 million of barrels per day. It has plunged by almost 10 million barrels per day since the war began.
Overall, more than a billion barrels of oil have not been produced since the conflict began in late February, according to the International Energy Agency's latest update. The figure amounts to about 14 million barrels per day.
"With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the IEA said. It also noted that the gap between the supply and demand is narrower because the market had a surplus heading into this year, the group noted.
The cartel last week agreed to a modest increase in oil production for June as the group continues adjusting output.
The meeting marked the first OPEC+ decision since the United Arab Emirates exited the group on May 1. The UAE's departure ended nearly six decades of membership and removed one of the alliance's largest producers from the coordinated quota system.
