Giving up on Hormuz: UAE builds on a port outside the strait

The exchange of messages between US President Donald Trump and Iran has returned in recent days to tones of threats rather than attacks. But the damage to the passage of ships in the Strait of Hormuz has already been done and is expected to accompany the Gulf states for a long time to come. Those who have chosen a creative regional solution to the challenge of the gateway to the Persian Gulf are the UAE, which has launched a program to expand port infrastructure in Fujairah in an attempt to bypass the Iranian threat in the long term.

Fujairah is a tiny emirate: it covers only about 2.7% of the UAE's territory, and about 2.5% of the country's residents live there. However, Fujairah has a strategic advantage that no other emirate has — it is located outside the Strait of Hormuz and already possesses good port infrastructure today. Therefore, President Mohammed bin Zayed and his staff see great potential in it.

Huge investment

The Emirati arm for this move is the port giant DP (Dubai Ports), which signed a 50-year agreement last week with the Fujairah Port Authority to develop two new terminals. According to reports, DP's initial investment in the project is estimated at hundreds of millions of dollars, but the final amount may be even higher.

The first terminal, Al-Ruglayat, is intended for handling containers and cargo; the second, Dibba, will focus on general cargo. The diversification shows how concerned Abu Dhabi is about the effects of the Iranian blockade of Hormuz — not only on oil exports, which account for about 23% of GDP according to official data, but also on other areas of the local economy. This is also part of the broad ambition of the UAE President, Mohammed bin Zayed, to reduce dependence on traditional sources of income.

DP is a key pillar in diversifying the Emirati economy and also a significant international player. Lloyd's data shows that in 2024, the company was ranked sixth in the world among container port operators, handling about 44.3 million TEUs (20-foot containers) — about 4.8% of global output.

At DP, of course, they do not mention Iran as the factor driving the move, but emphasize the economic potential of the two new terminals. Al-Ruglayat is planned to handle 2.5 million TEUs annually, alongside 1.7 million tons of general cargo and 190,000 CEUs (calculation units for vehicles). The terminal in Dibba is expected to handle up to 3.6 million tons of general cargo per year.

For comparison, the UAE's central port, Jebel Ali in Dubai, which is located within the Hormuz area, is the port with the highest output in the world outside the Far East (China, Singapore, and South Korea) and the ninth in the world overall. On normal days, Jebel Ali handled about 15.6 million TEUs, with its maximum capacity estimated at about 19.4 million.

Therefore, although the move in Fujairah is a clear attempt by Abu Dhabi to diversify export routes, even after the expansion, it will be an important, but only partial, solution.

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What about oil exports?

According to DP, upon completion of the project, the company's total maximum output in UAE ports will reach almost 22 million TEUs, and the capabilities for handling general cargo and vehicles are also expected to skyrocket. In Abu Dhabi, they are setting a goal of completing construction within about 24–30 months, and both terminals will be connected to DP's land logistics network, which is known mainly thanks to Jebel Ali.

DP avoids directly addressing the bigger question: Emirati oil exports, which have also been hit hard.

In 2025, about 2.02 million barrels of oil from the UAE passed through the Strait of Hormuz daily — the third largest amount after Saudi Arabia (5.43 million barrels per day) and Iraq (3.32 million), according to an analysis by the Arab Center in Washington based on International Energy Agency (IEA) data.

Even during the war, the oil pipeline from Abu Dhabi to Fujairah allowed it to continue exporting about 1.5–1.8 million barrels per day — although this is an amount limited by the pipeline's volume. It is possible that based on the Al-Ruglayat terminal, Abu Dhabi will seek to allow additional exports directly outside of Hormuz.

Ultimately, oil export infrastructure completely independent of the Strait of Hormuz could place the UAE in the best position in the industry among the Gulf states — almost all of whose oil is exported to the Far East. For comparison, Saudi Arabia, the world's largest oil exporter, enjoys a western coast on the Red Sea and an oil pipeline to the Yanbu port, which is capable of transporting about 7 million barrels per day.

However, these days even the Saudi advantage is limited, following the blockade of Saudi Arabia by the Houthi rebels in Yemen, as a result of which Saudi supply chains to the Far East have lengthened by about 14–28 days.

Therefore, the UAE's infrastructure through Fujairah may turn out to be a regional checkmate in the Gulf oil industry.