Live updates: Follow the latest news on the Iran war
With US President Donald Trump signalling that the Iran war will intensify for at least two or three more weeks, energy experts are pricing in a prolonged period of uncertainty and a longer timeline for the Gulf to bounce back.
Dr Karen Young, senior fellow at the Middle East Institute, suggested that, if the conflict ends by the middle of May, "that still means that we’re looking at higher-for-longer oil prices" through next year. “Kuwait has announced that it would take them four to six months to resume full production," she told The National. "So, these things get complicated. The tail-end of this crisis gets longer and longer as it lasts.”
The conflict, in which Iran has launched more than 2,500 ballistic missiles, cruise missiles and drones at the UAE, has disrupted commercial shipping and threatened the global energy system, said Amos Hochstein, special adviser to Joe Biden during his term in the White House.
“This is basically the worst-case scenario that we’ve had in the region because, one, we’ve gone to war, but Iran is retaliating against its neighbours, against countries like the UAE and the rest of the GCC countries,” Mr Hochstein said.
“They’ve weaponised commercial flow-throughs for the end of the global energy system and the global trading system with the Strait of Hormuz, which is a scenario that we always feared, but one that we didn’t think the Iranians would do. And they’re not distinguishing between civilian and military targets. So, this is a very difficult position. I think if it goes on for much longer, it’ll have great ramifications.”
With the strait effectively shut since February 28, Iran has pushed ahead with a plan to force commercial ships to pay millions of dollars for safe transit. The move is tantamount to “global economic extortion”, said Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.
“He’s absolutely right,” Dr Young said. “When we’re thinking about the disruption of free transit, the idea of a kind of toll road of the Strait of Hormuz, that’s not how our international economy functions. And the belief of the UAE that we need to support networks, connectivity, the development of global nodes, particularly across emerging markets, that is our safety. That is the continuity of growth and prosperity. And so, I think we have to fight for it.”
Energy markets are braced for the impact of a regional war that continues to rage. The UAE's stability and commitment to energy security provides a glimmer of hope in an otherwise uncertain landscape.
“We’re so lucky in this tumultuous time that certain countries have made investments in expanding capacity and expanding infrastructure that we need to get through this crisis,” Helima Croft of RBC Capital Markets told The National. “Think about where we’d be in this market right now if we did not have Fujairah. Yes, it’s been struck several times, but that is one of our main ways to avoid the Strait of Hormuz. It was a very thoughtful investment that is paying dividends now.”
With its strategic investments in key energy infrastructure, such as the Habshan-Fujairah oil pipeline, the UAE has been instrumental in helping to mitigate the effects of Iran's attacks on global oil supplies.
"The whole world owes the UAE for the fact that they did that,” Mr Hochstein said, referring to the construction of the pipeline. "[The UAE] has been able to put those products and that crude oil on the market now during this conflict.”
The ability of the Emirates to defend itself against Iranian attacks has also been impressive, with more than 90 per cent of drones and missiles intercepted. This has helped to maintain stability and prevent a wider escalation of the conflict.
"The UAE would be able to defend itself in astonishing numbers, over 90 per cent, defeating the Iranian attack and standing tall, standing strong, and has been able to survive this and thrive through it," Mr Hochstein added.
Despite the challenges, he believes the country will recover from the conflict. "The UAE will bounce back because they're good at what they do," he said. "They're smart investors. They're good at managing their own country and growing it."
