News / Middle East

Arab Gulf States Urged to Increase Pipelines After Iran's Oil Threats

An oil pump works at sunset in the desert oil fields of Sakhir, Bahrain, in the Persian Gulf.
An oil pump works at sunset in the desert oil fields of Sakhir, Bahrain, in the Persian Gulf.

As Iranian threats to close the Strait of Hormuz intensify, some energy experts are calling on Arab Gulf states to find alternative ways to export their petroleum. Experts differ, however, on whether proposed pipelines are economically feasible or whether Iran will follow through with its threats.

Nearly 40 percent of seaborne traded oil passes through the Strait of Hormuz, which connects the Persian Gulf to the Indian Ocean and is bordered by Iran and Oman. Iran is threatening to block the route. Any closure of the strategic waterway would likely send oil prices soaring and have a significant impact on the global economy.

Alternatives

Already one Gulf oil producer is opening an alternative route.

Earlier this month, the United Arab Emirates announced that a new pipeline able to pump 1.5 million barrels of oil per day from fields in Abu Dhabi to its Indian Ocean coast should be operating by June. The Emirates currently produces about 2.5 million barrels per day.

Kuwaiti oil expert Mousa Marafi says other Gulf producers should embark on similar projects.

"The pipeline that the UAE is doing is something related to the UAE only," he said. "But this is needed for Kuwaiti exports, for Saudi exports and also for Qatari exports."

Arab Gulf States Urged to Increase Pipelines After Iran's Oil Threats
Arab Gulf States Urged to Increase Pipelines After Iran's Oil Threats
Iran is vowing to “definitely” close the Strait if further sanctions on its controversial nuclear program prevent it from selling its crude abroad.

Sanctions

Western nations have been imposing tighter sanctions against Iran, hoping the moves will force the country to abandon its nuclear work. The West believes Iran’s nuclear program is aimed at building weapons, but Tehran insists it is solely for peaceful purposes.

The European Union agreed to an oil embargo against Iran starting from July. It followed similar sanctions agreed to by the United States.

According to Marafi, the continued threats by Tehran highlight the vulnerability of the Gulf oil producers.

"It’s a warning that you need this pipeline. And we should really do this very soon. This is important for the world altogether," he said.

Impact

Other analysts, however, warn Iran would likely suffer most if the Strait is disrupted.

Iranians are heavily dependent on the shipping channel for trade. Reeling from the current sanctions, Iran is experiencing rapid inflation and currency devaluation.

"The reality is that this neighborhood has lived with a variety of unstable and uncertain circumstances over the history of the last 50 years of the oil industry and never for one moment was the Strait of Hormuz closed," said Sean Evers, managing partner at Gulf Intelligence, who believes Iran is likely to renege on its promise to close the Strait.

Oil analyst Simon Wardell says not enough pipelines could be feasibly built to compensate for the shutdown of the Strait.

"With something in the region of 16 to 17 million barrels a day going through, that’s an awful lot of pipeline capacity you would have to move. So I think whatever happens you’re always going to have substantial volumes of oil flowing through that particular area," he said.

Retaliation

Wardell says the U.S. and other nations would not allow the Strait to be blocked for long. Western allies have announced they would take swift action against any move by Iran to halt oil flow.

"It is going to be in most counties’ interest - China, America, Europe - everyone’s interest really, to make sure the Strait is open so chances are the Strait will remain open," Wardell said.

For the time being, some 17 million barrels of oil flow daily through the Strait as U.S. warships patrol the area to make sure of safe passage.

You May Like

Turkey's Controversial Reform Bill Giving Investors Jitters

Homeland security reform bill will give police new powers in search, seizure, detention and arrests, while restricting the rights of suspects, their attorneys More

Audio Slideshow In Kenyan Prison, Good Grades Are Path to Freedom

Some inmates who get high marks could see their sentences commuted to non-custodial status More

'Rumble in the Jungle' Turns 40

'The Champ' knocked Foreman out to regain crown he had lost 7 years earlier when US government accused him of draft-dodging and boxing officials revoked his license More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Victorious Secularists Face Challenge to Form Government in Tunisiai
X
Henry Ridgwell
October 30, 2014 11:39 PM
Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Victorious Secularists Face Challenge to Form Government in Tunisia

Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Africa Tells its Story Through Fashion

In Africa, Fashion Week is a riot of colors, shapes, patterns and fabrics - against the backdrop of its ongoing struggle between nature and its fast-growing urban edge. How do these ideas translate into needle and thread? VOA’s Anita Powell visited this year’s Mercedes Benz Fashion Week Africa in Johannesburg to find out.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.

All About America

AppleAndroid