Hormuz Bypass Pressure Escalates as UAE Plans New Port
Miles Bennett
The Trump administration's threat of a 20% toll on Hormuz Strait cargo, compounded by US-Iran tensions, is pushing the UAE to consider a new east-coast port that bypasses the chokepoint — reshaping how Gulf oil reaches the world.
Why is the UAE building a new east-coast port?
The UAE is considering a new port and container terminal on its eastern coastline to bypass the Strait of Hormuz and reduce reliance on Jebel Ali, the Financial Times reported.
Dubai-based DP World is reportedly in talks to develop a new port and expand existing facilities along the Fujairah coast. DP World declined to comment.
Ahmed bin Sulayem, CEO of the Dubai Multi Commodities Centre, called the plan both an "immediate action" and a "medium-to-long-term project," adding that shipping companies won't focus on the Hormuz route until conditions there are safer.
How far has Saudi Arabia's pipeline reroute come?
Saudi Arabia has already diverted roughly 4 million barrels per day through the East-West Pipeline — known as Petroline, a cross-country line linking eastern oilfields to the Red Sea port of Yanbu.
The pipeline's full design capacity is about 7 million bpd. This means → only around 60% of capacity is in use, leaving theoretical headroom for further diversion.
Bob McNally, president of Rapidan Energy Group, called Saudi Arabia's reroute a "major success" and noted that UAE exports, with US military assistance, have largely recovered to pre-crisis levels.
Does bypassing Hormuz actually remove the risk?
Bypassing Hormuz does not eliminate geopolitical risk — it relocates it. Tankers loading at Yanbu must cross the Red Sea and pass through the Bab el-Mandeb Strait — a narrow chokepoint near Yemen — which faces its own Houthi attack threat.
Andy Lipow, president of Lipow Oil Associates, warned that if this route is blocked, millions of barrels per day would once again vanish from the market.
In plain terms = oil producers haven't found a safe corridor — they're spreading their bets across two risky routes instead of one.
What is the UAE's "shuttle transhipment" workaround?
The UAE has also deployed a short-term fix: chartering tankers to carry crude from inside the Strait to waters outside it, then reloading onto larger vessels bound for Asia.
This reflects a dual-track approach — short-term shuttle operations plus a medium-term port build — rather than waiting for infrastructure before acting.
Does bypassing Hormuz carry strategic weight beyond energy?
Carole Nakhle, CEO of Crystol Energy, noted that the UAE has been faster than most regional neighbours in announcing alternatives.
She stressed: once the UAE reduces its Hormuz exposure, it gains greater bargaining power in any potential negotiation with Iran — which itself erodes part of Tehran's leverage.
This means → the bypass is not just logistics-level risk management — it is a strategic move to shift negotiating position in a broader geopolitical contest.
The key unknowns remain: whether alternative routes can sustain throughput during peak demand, and whether the new port can be built before tensions ease — these two questions will determine whether the bypass strategy actually works.
Content is for reference only, not financial advice.