MP: UAE Pipeline Unable to Bypass Strait of Hormuz
(FNA)- A senior Iranian lawmaker downplayed the importance of the UAE's newly-built oil pipeline which is aimed at bypassing the strategic Strait of Hormuz, saying that the pipeline can only transfer a little portion of the crude produced in the region.
"Compared with the Strait of Hormuz, the volume of oil transfer through the UAE pipeline is very meager and the pipeline's capacity is not even one fifteenth of the capacity of oil shipment through the Strait of Hormuz," member of the parliament's Energy Commission Nasser Sudani told FNA on Wednesday.
The lawmaker further stated that the UAE's move to bypass the strait will increase costs of oil transfer for the country.
The United Arab Emirates inaugurated a pipeline to pump oil from East coast terminals, bypassing the strategic Strait of Hormuz.
In relevant remarks, another member of the parliament's Energy Commission dismissed as "media propaganda" the recent reports alleging that the UAE oil pipeline can make up for a part of supply drop in the market in case the strategic Strait of Hormuz is closed to oil tankers by Iran.
"The Strait of Hormuz has no replacement and the Untied Arab Emirates cannot leave any impact on Iran's standing through such measures," Ali Marvi told FNA on Tuesday.
"The Emiratis should surely make heavy costs for opening this pipeline," he continued.
Iran has repeatedly warned that it would shut the waterway, which is one of the busiest transport routes for seaborne oil, in case its security and energy supply to the global markets are endangered by the western powers.
Saudi Arabia and the United Arab Emirates this weekend announced the opening of new pipelines bypassing Hormuz, alleging that they can restore a total 40 percent of their supplies to the global markets through the pipelines if the Strait is closed by Iran.
Saudi Arabia and the UAE claim that the pipelines will more than double the total pipeline capacity avoiding the strait to 6.5m barrels a day, or about 40 per cent of the 17m b/d that transits Hormuz, but analysts said that the pipelines are not viewed as an alternative for sea shipments.
Analysts at JPMorgan bank said if the shipping routes actually became seriously threatened, "prices would quickly adjust to reflect the expected duration of the disruption and the potential for a mitigating release of OECD strategic reserves" and the focus among investors and traders would be on "the size of the overall supply disruption".