UAE pipeline deprives Iran of a potential target
The United Arab Emirates is celebrating the opening of its first oil export pipeline. So is the oil market and a lot of governments around the world.
About the only folks not celebrating are the Iranians.
What makes the Iranians so grumpy is that the 235-mile pipeline the UAE officially opened Sunday can carry up to 1.8 million barrels of crude oil a day to a port facing the Indian Ocean, where it will be loaded onto tankers and shipped to refineries around the world.
That’s 1.8 million fewer barrels of oil shipped via the Strait of Hormuz, the narrow waterway through which about a fifth of the world’s oil passes. This is the same waterway Iran keeps threatening to block unless the rest of the world backs off demands that Tehran abandon its nuclear ambitions.
The West claims the new pipeline diminishes the strategic value of the Hormuz Strait. At the same time, Iran points out that most of the region’s oil still has to pass through the strait to get to market. Both sides are right, which means Iran’s threats still carry weight, just not as much as before.
This latest pipeline joins several in the region taking overland routes to export terminals outside the Gulf from such key producers as Saudi Arabia. For anyone relying on those barrels, avoiding the Hormuz Strait is a victory for logic, engineering, and commerce aimed at frustrating Iran.
Of course, the need to avoid belligerent naval action is a great motivator. Hitler’s submarines triggered the 1940s boom in pipeline projects linking Texas and New York. No one wants to test whether Iran’s sub captains are as effective at sinking tankers as German U-boat commanders once were off the East Coast.
But pipelines aren’t bomb proof. They can be sabotaged, as we’ve seen many times in the Middle East, or plundered for cheap fuel, often with tragic consequences, as we’ve seen in Nigeria.
While depriving Iran’s navy of easy tanker targets might feel good, it can also give the market a false sense of security. Let’s face it: given the volatile politics of the Middle East, not even deeply-trenched pipelines can offer a bullet-proof guarantee against supply disruptions from the region that provides over a quarter of the world’s oil.
