Abu Dhabi National Oil Company (ADNOC) is offering a significant volume of crude oil from within the Persian Gulf to traders and refiners in Asia, marking the first such tender for these grades since the outbreak of conflict in the Middle East in late February.
According to traders familiar with the matter, at least 14 million barrels of UAE crude, including Upper Zakum, Umm Lulu, and Das grades, have been sold via a tender that concluded last Friday. They indicated that the sales volume could increase further, as ADNOC is conducting another tender with similar terms set to close this weekend. The crude is scheduled for loading and delivery between June and August.
Traders noted that the majority of the sold crude is Upper Zakum, which is typically loaded for export from the island of Zirku in the Persian Gulf. However, these cargoes can be collected at locations including Fujairah and Sohar, which lie outside the Persian Gulf and thus avoid the need to transit the blockaded Strait of Hormuz.
The traders stated that these cargoes were sold to refining companies in Asian nations such as China, Japan, South Korea, and India. They added that most of these Gulf crude cargoes were sold at a premium of only a few dollars above the Dubai benchmark price, with at least one cargo even sold at a discount of approximately $1 per barrel below the benchmark. This suggests the UAE may be attempting to gain market share by offering discounts.
Although the total volume currently sold remains significantly below pre-conflict levels, the UAE is gradually increasing the flow of crude transported via the Strait of Hormuz, providing additional supply to a market still experiencing a shortage of Middle Eastern crude.
Media tracking of tanker traffic data shows that the UAE's observable crude export flows in May were around 2.6 million barrels per day. This increase is likely attributable to some crude tankers successfully navigating the Strait of Hormuz, alongside the export of crude transported via an underground pipeline to the port of Fujairah.
It is understood that ADNOC currently operates a 252-mile (approximately 406 km) pipeline with a daily capacity of 1.5 million barrels. This pipeline has served as an "energy lifeline" for the UAE in recent months as shipping through the Strait of Hormuz has been obstructed by the regional situation. However, the pipeline's capacity is still less than half of the UAE's normal export volume, severely constraining the country's oil revenue.
Consequently, ADNOC is accelerating the construction of a new oil pipeline from inland oil fields to the port of Fujairah. Due to the Middle East conflict, the UAE has expedited the construction pace of this project, which is expected to become operational in 2027. The new pipeline will double ADNOC's export capacity through the port of Fujairah, bringing the UAE's total export capacity bypassing the Strait of Hormuz to 3 million barrels per day.
ADNOC's CEO, Sultan Ahmed Al Jaber, stated last month that the UAE has completed nearly 50% of the construction of a second oil pipeline bypassing the Strait of Hormuz. This expansion plan is closely linked to the UAE's decision to withdraw from the Organization of the Petroleum Exporting Countries (OPEC).
Having freed itself from OPEC's production restrictions, the UAE has clearly stated its intention to increase production to capture the demand surge created by the war. Even if navigation through the Strait of Hormuz resumes in the future, the expansion of the Fujairah port will provide the UAE with more flexible export options, enhancing its bargaining power in the global oil market.
On April 28, 2026, the UAE suddenly announced its formal withdrawal from OPEC and the "OPEC+" mechanism, effective May 1, ending nearly 60 years of membership. A UAE government statement said the decision was based on national interests and made after a comprehensive assessment of the country's oil production policy and its current and future capacity.
For the UAE, expanding bypass capacity is not only a commercial decision but also a core component of its national security strategy. Although the existing pipeline has not been directly attacked, facilities at both its ends have been damaged by Iranian drones and multiple assaults, including a gas processing facility near Habshan at the starting point hit by an Iranian drone; the terminal port of Fujairah has also been attacked several times during the conflict, temporarily halting shipments. These incidents demonstrate that even a single bypass route remains a vulnerable link due to its infrastructure. Therefore, the expansion includes not only increased capacity but also redundant design and protective upgrades along the pipeline route and port facilities.
However, the renewed outbreak of conflict in the Middle East could once again disrupt crude exports from the region. Influenced by the Middle East situation, at the time of writing, Brent crude futures were up over 3% at $96.40 per barrel, while WTI crude futures rose nearly 4% to $94.03 per barrel.
On the news front, the Israeli Defense Forces conducted an airstrike on the southern suburbs of Beirut, Lebanon's capital, on June 7. Iran responded by launching multiple rounds of missiles toward Israel that evening. In the early hours of June 8, the Israeli military issued a statement saying its air force had carried out strikes on military targets in western and central Iran. Iranian media reported explosions heard in Tehran, as well as in major cities like Tabriz and Isfahan, in the early hours of that day. The Israeli Defense Forces confirmed on the morning of June 8 that the Israeli air force had struck multiple targets at the Mahshahr petrochemical complex in southwestern Iran. The Islamic Revolutionary Guard Corps of Iran issued a statement on June 8, announcing the launch of a military operation codenamed "Nasr," targeting several Israeli air force bases within Israel. The statement claimed the IRGC Aerospace Force struck the Nevatim and Tel Nof air bases. The statement emphasized that this operation was in response to Israel's previous missile attacks on multiple radar facilities inside Iran. This phase of the operation emphasized rapid response and expanding the scope of targets. The statement also added that various operational units of the IRGC are prepared to carry out further actions on various fronts and have developed contingency plans for different scenarios.
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