Gulf producers move to restore flows as Hormuz tests ceasefire pact

Saudi Arabia and the United Arab Emirates are preparing to ramp up oil exports as the Strait of Hormuz reopens under the US–Iran pact, Bloomberg said in a report on Friday. 

The two Gulf producers are positioning themselves to restore flows quickly, highlighting their strategic infrastructure advantage and signaling a potential wave of supply into global markets.

Gulf producers ready for Hormuz reopening

Saudi Aramco and Abu Dhabi National Oil Co. have been gearing up for the reopening of Hormuz, the world’s most critical energy chokepoint. 

The strait, which carries about one‑fifth of global oil and LNG shipments, has been effectively blocked since February following US and Israeli strikes on Iran.

The interim ceasefire agreement signed this week has paved the way for traffic to resume, with Iran pledging to clear mines and allow vessels safe passage.

Saudi Arabia has relied heavily on its East‑West Pipeline, which runs from the Abqaiq oil fields to the Red Sea port of Yanbu, to bypass Hormuz during the conflict.

The pipeline reportedly has been operating at full capacity of 7 million barrels per day since March, helping Riyadh sustain exports despite the blockade. 

The UAE, meanwhile, has used its Abu Dhabi Crude Oil Pipeline to ship 1.5 million barrels per day to Fujairah, a port outside Hormuz.

ADNOC is also building a second pipeline to double Fujairah’s export capacity by 2027.

Market impact and supply outlook

The reopening of Hormuz is expected to unleash millions of barrels of stranded crude into the market.

Vessel‑tracking data showed that Saudi and Emirati tankers were already preparing to transit the strait. 

Analysts believe this could ease supply constraints and put downward pressure on prices, which spiked to nearly $120 per barrel at the height of the conflict.

Brent crude has since retreated below $80, reflecting optimism that Gulf exports will normalize.

However, experts cautioned that insurers and shipowners remain wary. Questions over mine clearance, traffic management, and long‑term security arrangements persist.

Industry groups such as Intertanko and Bimco have warned that a full return to pre‑war shipping volumes could take months.

Strategic positioning of Saudi Arabia and UAE

Saudi Arabia and the UAE are better positioned than other Gulf producers to capitalise on the reopening, according to the Bloomberg report.

Their pipeline networks and alternative ports allowed them to sustain partial exports during the blockade, unlike Kuwait and Qatar, which were almost entirely cut off. 

This infrastructure advantage means Riyadh and Abu Dhabi can scale up shipments more quickly, reinforcing their dominance in global energy markets.

The UAE has also announced plans to expand its eastern ports of Dibba, Fujairah, and Khor Fakkan, aiming to reduce dependence on Hormuz entirely.

Foreign Trade Minister Thani Al Zeyoudi told Bloomberg that the country is “moving toward zero Hormuz dependency,” regardless of whether the strait remains open.

Global implications

The reopening of Hormuz carries significant implications for energy‑importing nations such as India, which sources nearly half its crude through the strait. 

Indian refiners are already anticipating lower freight costs and reduced inflationary pressures.

For global markets, the return of Gulf supply could stabilize prices, though analysts warn that weak refining margins in Asia may limit immediate demand.

The geopolitical dimension remains fragile. The US President Donald Trump has threatened renewed military action if Iran fails to comply with the ceasefire terms.

This uncertainty means that while Saudi Arabia and the UAE are preparing for a surge in exports, the durability of the reopening is far from guaranteed.