Oil exports from the United Arab Emirates (UAE) in early June recovered to nearly 85% of the country's pre-Iran war levels, according to a report from the International Energy Agency (IEA). This rebound occurred even before an interim peace deal was signed between Washington and Tehran. The UAE's exports reached 4.3 million barrels per day in early June, a significant increase from 1.9 million barrels per day in March, shortly after the war's outbreak.
The UAE achieved this rapid recovery by leveraging a pipeline that bypasses the Strait of Hormuz, connecting to the port of Fujairah. This pipeline allows for the export of 1.8 million barrels of crude per day. Additionally, the country utilized its 42-million-barrel Mandous underground storage facility near Fujairah, providing crucial flexibility in its export operations.
The IEA highlighted that the UAE's resilient infrastructure, including storage, pipelines, and alternative shipping routes, enabled it to maintain a relatively high level of exports despite severe disruptions. This strategic approach helped the country bounce back and meet its export commitments, predominantly to Asian markets, ahead of many other Gulf producers. The country's crude output also neared record highs in June, exceeding pre-war levels and vindicating its decision to leave OPEC and OPEC+ on May 1st to operate free from quota restrictions. This jump in output comes as concerns over severe supply disruptions during the war have shifted to worries about surplus supply in the oil markets, with Brent crude trading around $72 a barrel in June, similar to pre-war levels.
The swift recovery in UAE's exports contrasts with other Gulf producers, many of whom are still well below their pre-conflict production levels despite restoring exports through the Strait of Hormuz. For example, Iraq, OPEC's second-largest producer, exported approximately 780,000 barrels per day in June, only about one-fifth of its pre-conflict volumes. Kuwaiti output, while tripling May levels to 1.65 million barrels per day in June, remained nearly 1 million barrels per day short of its pre-conflict capacity. Saudi Arabia, however, also increased crude oil flows through its East-West pipeline for export via the Red Sea port of Yanbu, boosting exports from $2 million barrels per day to over $5 million barrels per day in early June. This aggressive push by the UAE, underscored by ADNOC selling crude through tenders at discounted prices, reflects Abu Dhabi's belief that years of investment in production capacity justify greater freedom to supply global markets without restrictions.
