# [WARNING] UAE–Iraq Expand Pipeline Bypass Capacity Around Strait of Hormuz

*Tuesday, May 26, 2026 at 4:29 PM UTC — Hamer Intelligence Services Desk*

**Detected**: 2026-05-26T16:29:44.473Z (4h ago)
**Tags**: MARKET, ENERGY, oil, pipelines, Middle East, supply-side
**Sources**: OSINT
**Permalink**: https://hamerintel.com/data/alerts/8226.md
**Source**: https://hamerintel.com/summaries

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**Summary**: Nikkei reports that the UAE and Iraq are expanding pipeline capacity to bypass the Strait of Hormuz. This incrementally strengthens medium-term resilience of Gulf exports to chokepoint disruption, marginally tempering the structural risk premium in crude, though it is not large enough to offset near-term escalation risk.

## Detail

1) What happened: According to Nikkei, the UAE and Iraq have agreed to expand pipeline capacity that allows crude exports to bypass the Strait of Hormuz. While technical details and volumes are not fully specified in the snippet, this appears to involve enhancing existing overland and pipeline links that route oil to terminals outside the immediate Hormuz chokepoint (e.g., via the UAE’s Fujairah corridor and Iraqi connections).

2) Supply/demand impact: In the medium to long term, additional pipeline capacity that avoids Hormuz reduces the vulnerability of regional supply to maritime disruptions. If the expansion adds on the order of several hundred thousand barrels per day of bypass capacity over time, that portion of Gulf exports becomes less exposed to blockade or attack scenarios. However, the impact is prospective: capacity expansions take time to build and commission, and near-term flows are still overwhelmingly dependent on Hormuz. As such, this development modestly lowers tail-risk pricing for a full closure but does not negate the current spike in perceived risk driven by recent tanker incidents.

3) Affected assets and direction: Structurally, this is slightly bearish for the long-dated geopolitical risk premium embedded in Brent and Dubai curves, particularly beyond 1–2 years where investors price worst-case disruption scenarios. It is also mildly supportive for the investment case of UAE and Iraqi crude exports routed via alternative terminals like Fujairah. In the immediate term, the effect will likely be overshadowed by active security incidents, so any price impact today will be small and could manifest as relative resilience in long-dated contracts vs front-months.

4) Historical precedent: Similar diversification efforts, such as the UAE’s Habshan–Fujairah pipeline and Saudi Arabia’s East–West Petroline, have historically been cited by markets as partial mitigants to Hormuz closure risk, shaving some risk premium from the back end of the curve once volumes ramped.

5) Duration: This is a structural, multi-year factor. As capacity comes online and is reliably utilized, crude benchmarks may carry a somewhat lower embedded risk premium for total Gulf export loss scenarios, but near-term pricing will remain dominated by current incidents and regional tensions.


**AFFECTED ASSETS:** Brent Crude, WTI Crude, Dubai Crude, Murban crude, Long-dated oil futures (3y+), Middle East sovereign credit (Iraq, UAE)