Adnoc's second Hormuz bypass pipeline targets early 2027 start

The report indicates a medium-term offset for oil markets from Hormuz risk, but not immediate relief, as no new bypass capacity comes online before early 2027. Until that time, Gulf supply remains vulnerable to further escalations, meaning the war-risk premium will likely persist despite this news. Once operational, a second Fujairah outlet would secure more of the UAE's medium sour crude for Asian buyers, potentially reducing risk premiums on Gulf grades under term contracts. The larger vulnerability remains with Gulf producers lacking comparable bypass options, so a definitive start date for Adnoc alone does little to alter the overall supply picture.

Adnoc is constructing a route around Hormuz, but the new terminal will not be ready until early 2027, meaning the market must continue to rely on the strait for some time.

The report highlights the following details:

• According to Bloomberg, Adnoc has informed some Asian refiners that it may begin supplying Upper Zakum crude from Fujairah in early 2027.
• The crude will flow via the new West-East 1 pipeline, bypassing the Strait of Hormuz where shipping has been disrupted.
• In May, Adnoc announced it was accelerating construction; CEO Sultan Al Jaber later stated the pipeline was almost 50% complete.
• Once operational, the pipeline is expected to double Adnoc's export capacity through Fujairah.
• The existing Habshan-Fujairah pipeline already has a capacity of up to 1.8 million barrels per day.
• The UAE left OPEC effective May 1 and aims for crude production capacity of 5 million barrels per day by 2027.

Bloomberg reported, citing sources, that Abu Dhabi National Oil Co. has told some Asian refiners that a portion of their crude from offshore fields may be delivered via a new Hormuz-bypass pipeline from early 2027.

Per the report, Adnoc has suggested it may start delivering Upper Zakum crude to term customers from Fujairah in the initial months of 2027. Upper Zakum is extracted from Persian Gulf fields, so its exports typically must traverse Hormuz, where shipping has faced disruptions due to the Iran conflict. This guidance represents the most precise timeline provided so far for the project. In May, Adnoc stated it was accelerating construction and expected the pipeline to be ready by the following year, without offering additional specifics.

The West-East 1 pipeline was expedited in May. Later that month, Adnoc CEO Sultan Al Jaber stated the pipeline was about 50% complete and would, when operational, double Adnoc's export capacity via Fujairah, a terminal located on the Gulf of Oman outside the strait. The UAE's current Habshan-Fujairah pipeline already has a capacity of 1.8 million barrels per day.

This pipeline is part of a wider UAE strategy to safeguard its exports as long as Hormuz is disputed. The UAE, which exited OPEC effective May 1, aims to reach crude production capacity of 5 million barrels per day by 2027.

The timeline is especially important for Asian buyers, who depend significantly on Gulf crude that must now either pass through the strait or vie for constrained space on the current bypass. A second exit would provide Adnoc's term customers with a more dependable supply route, but it would not eliminate the broader risk for the substantial volumes from other Gulf producers lacking a similar alternative.

The on-time commencement and the speed of flow increases will be critical in assessing how much Gulf supply can be shielded from any future escalation.