Energy markets have entered an unprecedented crisis, pushing the world to look instinctively toward the largest producers: Saudi Arabia, the United States, or Russia. However, in the background, but sometimes hitting already the headlines, of today’s geopolitical turbulence, especially due to the ongoing, escalating confrontation around Iran, showing the fragility of maritime chokepoints (Hormuz), another actor has already, for years, quietly become indispensable to the current and future stability of global energy. The United Arab Emirates, and particularly Abu Dhabi, has emerged, and will be even more showing its power in the future, as one of the most strategically important pillars of energy security globally.

Don’t think that this role is accidental; it is part of an existing national strategy. Over the last two decades, Abu Dhabi, supported by its national oil company, ADNOC, as well as its expanding list of sovereign wealth funds, including ADIA, Mubadala, and IHC, has pursued a deliberate strategy to combine hydrocarbon reliability with large-scale investment in the energy transition. This dual-energy model has been replicated only by a few other countries, as it is built on maintaining a robust oil and gas supply while positioning itself as a leading investor in renewable energy and hydrogen.

In moments of crisis, such as right now, this dual approach matters more than ever.

The point is illustrated by the immediate geopolitical backdrop, as escalation in the Gulf region has again shown the impact and vulnerability of global energy flows. As the Arabian Gulf transports roughly one-fifth of the world’s oil and is also a critical part of global liquefied natural gas transit, all of which passes through the Strait of Hormuz, one of the most critical maritime chokepoints on the planet. Any disruption, military or proxy activities, or even perceived threats can destabilize markets and trigger dramatic price spikes within hours.

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Last week’s tensions and military actions have already forced regional and global shipping companies, international insurers, and energy traders to reassess their exposure to the Middle East. At the same time, the fallout is also hitting the Red Sea/Bab El Mandab area, the East Mediterranean, the Suez Canal, and the Indian Ocean. Due to these real and perceived risks, tanker risk premiums have increased, maritime insurance costs are spiking, and energy markets are pricing in the possibility that the Strait could become partially or fully inaccessible, not for days but for a prolonged period.

These circumstances have reshuffled and potentially partially rewritten global energy markets. Without any doubt, global energy markets are looking at the capacity of certain producers to stabilize supply, which is becoming crucial. Abu Dhabi sits at the center of that equation, based on the role of the Abu Dhabi National Oil Company (ADNOC). The Emirate holds and increasingly controls one of the most technologically advanced and strategically managed oil sectors in the world. Before the Iran crisis hit, ADNOC had already expanded its production capacity to around 4.8-4.9 million bpd, aiming to reach 5 million bpd by the end of the decade.

The most important point in this equation is that the UAE maintains significant spare production capacity, which, in theory, will allow it to increase output when markets tighten. As has been the case since the 1970s, in the volatile arithmetic of global oil markets, spare capacity should be considered a hard power. Spare production capacity acts as a buffer against supply shocks, especially during crises. Its “marginal barrels” are providing the flexibility that global energy markets in general need to prevent extreme price spikes. While the world has long looked to OPEC Kingpin Saudi Arabia to hold most of that stabilizing capacity, the UAE has stepped up its own capabilities, joining the very small group of producers capable of acting as a “swing supplier.”

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Market parties should understand that this spare production capacity is not merely a technical feature of the UAE’s oil sector. In recent years, it has been established as part of a deliberate national strategic philosophy. The powers in Abu Dhabi understood not only the role but also the instrumental basis of this, as energy reliability translates into geopolitical influence. By maintaining low-cost production and up-to-date, future-proof infrastructure, combined with investment-friendly frameworks, Abu Dhabi has built a reputation as one of the most dependable suppliers in the global market.

For sure, part of this is the country’s resource base, as Abu Dhabi holds roughly eight percent of the world’s proven crude oil reserves. This clear factor supports and cements its physical foundation for long-term supply security. Asia and Europe are increasingly looking at Abu Dhabi as a reliable party, which is a key asset. Due to the Ukraine war, Europe has been forced to implement strategies to replace its Russian energy imports, crude oil, and natural gas. Gulf producers, especially in that European context, have become central in the Old Continent’s diversification strategy.

Without, however, addressing the current state of affairs, we will miss the larger strategic advantage the UAE holds. While others also hold vast reserves and capacity, the main differentiator at present is that Abu Dhabi not only can pump oil but also move it. This, when looking at Hormuz and other issues, matters most, as regional tensions have already or threaten to disrupt the main maritime routes.

Unlike most other Gulf producers, whose exports are mainly linked to Hormuz, the UAE has spent the past decade building an alternative architecture for energy exports. This, without any doubt, is now going to prove to be pivotal and support its strategic value.

The Habshan-Fujairah pipeline is playing a pivotal role here. The pipeline, also known as the Abu Dhabi Crude Oil Pipeline, is approximately 360 kilometers long, connecting Abu Dhabi’s inland oil fields to the port of Fujairah on the Gulf of Oman. As has always been the target, the pipeline allows crude oil to flow, bypassing the Strait of Hormuz entirely. It has a transport capacity of around 1.5 to 1.8 million bpd, which supports the UAE in continuing to export a substantial share of its production. It doesn’t need to have tankers passing through Hormuz.

The total project was designed with exactly the current geopolitical scenarios in mind. The explicit goal was to safeguard oil exports through Hormuz, even though most oil market analysts doubted that Hormuz would ever be closed. Abu Dhabi’s foresight (to include a black swan scenario in plain sight) is now paying off.

The pipeline feeds directly into the rapidly expanding energy hub of Fujairah, which has evolved into one of the most important oil storage and bunkering centers in the global maritime system. The total scale of the Fujairah hub matters, as its storage capacity runs into tens of millions of barrels of crude and refined products. At the same time, it offers sufficient offshore single-point moorings, allowing large tankers to load cargoes without entering the Persian Gulf. This situation, pipeline, storage, and moorings, still allows Abu Dhabi to have crude oil flow to global markets.

When looking at shipping markets, Fujairah currently plays an additional role. The port is not only an export terminal, especially at present a pivotal one, but it is also one of the world’s largest marine fuel bunkering hubs. Thousands of vessels transiting between Asia, Europe, and Africa will bunk in the port for fuel and lubricants and take advantage of its logistical support. Its refining and blending facilities produce large volumes of marine fuel oil and low-sulfur bunker fuel for tankers, container ships, and bulk carriers operating along the Indian Ocean trade routes.

The above role is even more critical during a crisis. Shipping companies are already rerouting cargoes, seeking safe and reliable refueling points, and will need Fujairah without entering the more vulnerable waters of the Strait.

Abu Dhabi is not standing still either, as its NOC continues to expand the infrastructure feeding Fujairah. There is a major expansion planned, focusing on pipeline capacity and expanded storage terminals. The underlying target is clear: increase export resilience while reducing overall dependence on Hormuz.

Such investments reflect a broader strategic philosophy. Energy security is not only about production volumes; it is also about logistics, redundancy, and infrastructure resilience.

At the same time, the UAE’s strategy does not stop at hydrocarbons, as it is building one of the most ambitious renewable energy portfolios in the world. Abu Dhabi’s Masdar, the state-backed clean energy company, is already a global player in solar, wind, and hydrogen development, operating renewable energy projects in more than 40 countries, with around 100 gigawatts of installed capacity by 2030. This is part of the UAE’s broader Net Zero by 2050 strategy. Full focus is on diversification of its national energy mix while maintaining the country’s role as a major global energy exporter. Madar invests in large-scale renewable projects and hydrogen initiatives designed to help the continent decarbonize heavy industry and transport, as well as in other parts of the world.  By investing heavily in both systems, Abu Dhabi is positioning itself as a bridge between the two.

In many ways, the UAE’s energy strategy reflects a pragmatic understanding of the global transition that is often missing from political debates elsewhere. The shift toward cleaner energy will not happen overnight. For decades to come, the world will still require reliable supplies of oil and gas, even as renewable capacity expands rapidly. Countries that can engage across all sectors will shape the future of the global energy landscape.

In an era defined by volatility and uncertainty, that combination of reliability and adaptability may prove to be one of the most valuable energy assets the world possesses.

By Cyril Widdershoven for Oilprice.com

https://oilprice.com/Energy/Crude-Oil/The-UAEs-Energy-Playbook-Is-Paying-Off-Amid-Global-Turmoil.amp.html