DUBAI: The new Dh10 billion Habshan-Fujairah pipeline saw crude oil exports begin yesterday in Abu Dhabi, bypassing the Straits of Hormuz — a politically and economically strategic move for the UAE, experts said.

About 30 per cent of the UAE’s crude oil was exported through the pipeline from Abu Dhabi yesterday but this is expected to increase to 50 per cent or one million barrels a day by July 1, Dr. Numan Ashour, A UAE based economist, told Gulf News.

The pipeline ends the UAE’s total dependence on the vital Gulf shipping artery which Iran has threatened to block as Western sanctions on its oil exports have tightened.

It will secure safe transportation of the UAE’s oil exports, cut insurance costs and guarantee uninterrupted oil revenue flowing into the country in the face of Iranian threats or in case of war, analysts said.

“It is significant first because it reduces reliance on a troubled Hormuz and gives the UAE the chance to continue a major part of its exports unimpeded. Secondly, it will contribute to making Fujairah a major oil terminal as it will pull additional storage and handling projects and a well- sophisticated refinery in the near future,” Saadallah Al Fathi, former head of the Energy Studies Department in Opec Secretariat in Vienna, said in an email to Gulf News.

The pipeline is likely to reduce the UAE’s transport costs, said Ashour.

“The 360-km pipeline with a single 48-inch diameter also reduces shipping costs for the UAE’s oil exports because shippers charge a insurance premiums based on war risk for entering the Gulf Waters,” he said.

Other Gulf Opec producers Kuwait and Qatar will continue to rely on shipping through the Strait to export fuel amid escalating tensions in the region.

Politically, the pipeline is a strategic asset to the UAE.

“It will show Iran that the countries of the region will not take its threats lightly and that they have the means to reduce the damage if ever it occurs. It is also an invitation to Iran to follow a cooperative policy rather than force other countries into expensive means to deny Iran the possibility of threatening their exports,” said Al Fathi.