How long can Iran play its energy card?

Despite the lopsided losses suffered by Iran in its war with the United States and Israel, Iran was able to hold its own through economic damage inflicted through its blockade of the Strait of Hormuz. But this strategy has a short shelf life.When Iran implemented its blockade of the strait in March, the seaborne trade of one-fifth of the world’s oil ground to a halt, triggering economic chaos around the world. This “energy card” proved to be Iran’s ace in the hole and forced Washington to switch its war aims from the maximalist demands of regime change in the opening days of the conflict to the more reserved nuclear negotiations and desperate attempts to restore the status quo of the strait.However, subsequent developments have begun to counteract this strategy and could render it almost useless within a year.

The Gulf’s current overland capacity

At the start of the war, only two overland pipelines allowed the Gulf countries to transport oil and gas overland, bypassing the Strait of Hormuz, one in Saudi Arabia and the other in the United Arab Emirates.The longest and largest, Saudi Arabia’s Petroline, was built during the Iran-Iraq War of the 1980s to avoid the scenario playing out in the current war. The pipeline crosses 750 miles across the country east to west, and before the war, could transport 5 million barrels per day. After the strait was closed, the country converted a gas pipeline to transport crude oil, boosting Saudi Arabia’s overland oil transport to 7 million bpd.The UAE relies on a single pipeline to bypass the strait — the Habshan-Fujairah pipeline — completed in 2012, and which can transport up to 1.8 million barrels per day. The UAE’s gas and oil-rich regions are located on the western side of the country, so most of its shipping naturally occurs in western ports such as Dubai. The 235-mile-long pipeline transports oil and gas through the desert to the Port of Fujairah on the Gulf of Oman.The UAE began construction on a second pipeline before the war, but the closure of the strait added new urgency at a May board meeting, Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin ⁠Zayed instructed the state-owned Abu Dhabi National Oil Company to fast-track the construction of a second pipeline to transport oil and liquified natural gas overland to ports in the east of the country, located beyond the strait. The West-East pipeline is now expected to be completed sometime next year.Under the OPEC quota, the UAE produced 3.2 million to 3.6 million barrels per day — nearly all of which can be transported through the two oil pipelines once the second is complete. However, the country left the organization in May, and its new target for 2027 is around 5.2 million bpd. The increased production means the country will need to build a third pipeline to ship its full capacity overland, something UAE Minister of Foreign Trade Thani Al Zeyoudi told Bloomberg will soon be underway. He also said in the May interview that the UAE was moving to cut its reliance on the strait to “zero.”On Monday, the Financial Times reported that DP World, the UAE’s flagship port operator, was constructing a port and a container terminal in Fujairah on its eastern coast, the receiving end of its pipelines, shifting much of its port capacity beyond the strait. The country’s primary container port, Jebel Ali on the western coast, dropped to 5%-10% of its prewar activity after the war started.Iran’s energy card timeline