New York's main contract, light sweet crude for August delivery, dipped to US$86.7 a barrel and Brent North Sea crude for delivery in August retreated to US$102.3. Oil prices have fallen in Asia on opening of alternative crude pipelines bypassing the Strait of Hormuz by Saudi Arabia and the United Arab Emirates. Over the past few months, Iran has repeatedly threatening to close the pipeline as its trump card in its bargaining with the West, alleviating supply concerns.
This move of fresh transport oil link should force Iran back to the negotiating table.
The UAE yesterday inaugurated its newest pipeline, which demonstrated its ability to bypass the Strait of Hormuz by pumping 500,000 barrels of oil from the emirate to Fujairah oil terminal on the Gulf of Oman. The pipeline will be fully operational in August, and will have an initial capacity of 1.5 mln bpd rising to a maximum 1.8 mln bpd. Saudi Arabia converted a natural gas pipeline running from the country's eastern province to a terminal near the Red Sea to enable it to pump crude. Reports estimated that the new links will more than double the total pipeline capacity bypassing the Strait of Hormuz to 6.5 mln bpd, almost 40% of the 17 mln barrels that transits Hormuz.