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The de facto closure of the Strait of Hormuz by Iran is an act of “economic terrorism” against every nation in the world, Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc, said on Monday.
“Weaponising the Strait of Hormuz is not an act of aggression against one nation, it’s economic terrorism against every nation,” Dr Al Jaber said in a virtual address to CERAWeek by S&P Global, an annual gathering of energy executives in Houston, Texas.
“No country should be allowed to hold Hormuz hostage,” he added.
His comments followed Iran’s threat on Monday to mine the Strait of Hormuz, a critical chokepoint through which a fifth of the world’s oil passes. Around 20 million barrels per day, along with over a third of the world's fertiliser and almost a quarter of the total petrochemicals, transits through the strait.
Tanker transits through the strait have collapsed by approximately 92 per cent compared to the week before the conflict began on February 28, Kpler vessel tracking data shows.
Dr Al Jaber said Adnoc's facilities had not been spared, with Iranian strikes targeting energy infrastructure across the UAE, including the Shah gas field, the Habshan gas processing complex and the Ruwais refining and petrochemicals hub, which are among the largest industrial installations in the world.
Despite what he described as strikes "no civilian enterprise should ever have to deal with", he said Adnoc had deployed extraordinary measures to maintain supply to customers.
"Our defences have been tested. Our resilience has been tested. Our character has been tested. And we withstood," he said.
Economic impact
Dr Al Jaber highlighted the broader economic impact of the blockade.
"When Hormuz is squeezed, the pressure is immediately felt around the world. In just three weeks, the price of oil has risen by 50 per cent," he said.
"This is raising the cost of living for those who can least afford it and slowing economic growth everywhere," he said.
A 10 per cent increase in oil prices over the course of a year could raise global inflation by around 40 basis points and reduce global economic growth by between 0.1 and 0.2 per cent, IMF managing director Kristalina Georgieva said at the beginning of the conflict.
Oil prices are up 84 per cent year to date as the blockade of Hormuz and supply outages from Opec’s top producers have roiled oil markets.
However, prices slid more than 10 per cent shortly after US President Donald Trump said military strikes on Iran's energy infrastructure had been postponed after talks with Tehran. Brent, the benchmark for two-thirds of the world's oil, dropped 9.75 per cent to $101.25 a barrel at 7.14pm UAE time on Monday. West Texas Intermediate, the gauge that tracks US crude, was down 8.78 per cent to $89.61 per barrel.
Dr Al Jaber also spoke about the limitations of market fixes. "This is not a supply issue. It is a security issue, and it has only one durable answer: keeping the strait open. We cannot trade our way out of this crisis," he said.
US investments
Despite the crisis and impact on business in the region, Adnoc is “actively exploring opportunities across the whole energy value chain” in the US, Dr Al Jaber said.
“We are keen to expand our investments in hard infrastructure from storage, to liquefaction, to regasification plants,” he added.
Together with investment arm XRG and clean energy developer Masdar, the company has already deployed more than $85 billion into US energy assets spanning power generation, advanced chemicals and operations across 19 states.
"The US offers a unique combination of resource depth and investment stability," Dr Al Jaber said.
Dr Al Jaber said the UAE had taken every possible step to prevent the conflict. He closed with an invitation for the global energy industry to join the UAE at Abu Dhabi International Petroleum Exhibition and Conference in November for what he framed as a working session on the resilience of the global energy system.
"Stability does not happen on its own. It must be built deliberately and collectively," he said.
