Abu Dhabi Bets Hundreds of Billions on Bypassing the Strait of Hormuz
TREE NEWS reports: Abu Dhabi is mounting its most aggressive push yet to restructure Middle East energy exports, spearheaded by L’imad Holding — the roughly $300 billion sovereign fund chaired by Crown Prince Sheikh Khaled bin Mohamed Al Nahyan, who also sits atop ADNOC’s board executive committee. The fund is leading a strategy formally branded “Zero Hormuz,” centered on transforming Fujairah, a port on the Gulf of Oman that sits entirely outside the strait, into a new crude and refined-product export hub.
L’imad plans to commit tens of billions of dollars to port infrastructure beyond the chokepoint, and has teamed with BlackRock’s Global Infrastructure Partners, Temasek and ADNOC to lock in up to $30 billion of energy transport, logistics and water infrastructure investment. The fund also intends to take Abu Dhabi Ports Co. private at a valuation near $9 billion. ADNOC is building a second pipeline to Fujairah to double export capacity, while DP World is independently advancing a new container terminal there.
The Numbers Behind the Strategy
Quantifying the shift, Goldman Sachs’ commodities team estimates that with continued pipeline expansion, more than 45% of pre-war Persian Gulf export volumes could bypass Hormuz by end-2027, rising above 60% by end-2028. Effective bypass capacity — combining Yanbu, Fujairah and Ceyhan flows — would add 3.8 million barrels per day by end-2027 and a cumulative 7.3 million bpd by end-2028, exceeding 14 million bpd, against roughly 23 million bpd of pre-war Gulf exports that needed routing around the strait. Under an accelerated scenario, bypass rates could reach 75%; under a conservative one, just 45%.
Fujairah is already straining under the load. Combined crude, refined products and LPG flows through the port reached 3.6 million bpd in late September, more than double the pre-war 1.7 million bpd and ahead of Yanbu’s 2.6 million bpd. UAE exports are running at 110% of 2025 averages, while Iran’s seaborne crude exports were near zero in September.
Market Implications
- Oil: Goldman lifted its long-term Brent assumption (three-year forward) by $9 to $76/bbl to reflect a higher structural security premium, but flagged that expanding bypass capacity poses downside risk to that assumption. Every barrel redirected to Fujairah erodes the risk premium Iran can extract.
- Equities: Infrastructure, pipeline, port and defense names stand to benefit. BlackRock’s GIP effectively gains a toll road around Iran. UAE-linked logistics and energy names gain strategic optionality.
- Bonds & currencies: Reduced chokepoint risk could compress geopolitical risk premia embedded in Gulf sovereign debt and support regional currencies pegged to the dollar, while lowering the tail-risk premium that occasionally spikes oil-linked inflation expectations.
- Commodities & crypto: A structurally less fragile oil supply chain modestly caps energy-driven inflation hedging demand; crypto’s “digital gold” bid during Middle East flare-ups may cool if chokepoint risk recedes.
The Catch: Bypassing the Strait, Not the Drones
Fujairah is no safe harbor. It lies roughly 80 miles from Hormuz, fully within range of Iranian drones and short-range missiles. The port has been struck repeatedly, and Iran has explicitly threatened its pipelines. Saudi Arabia’s 7 million bpd East-West pipeline — the region’s largest bypass — was shut by drone attacks in September and only restored weeks later. As Chatham House’s Sanam Vakil notes, Abu Dhabi must now prepare for attacks on infrastructure outside the strait — and L’imad’s next big line item may well be air defense.
Key Takeaways for Investors
- The Gulf’s most strategic real estate is migrating from inside the strait to the Gulf of Oman coast — a multi-decade repricing.
- Watch pipeline project timelines and Goldman’s base case: 60% bypass by 2028 is the number to track.
- Defense and air-defense spending is the logical next leg of this trade.
- Hormuz won’t become worthless, but its leverage over Iran is being systematically dismantled.
