Reuters reported that the United Arab Emirates has delayed the launch of a crucial oil pipeline to bypass the Straits of Hormuz to mid 2012, which analysts said would add to supply worries at a time when Iran threatens to block the strait for all the Gulf's oil.
Oil prices have remained elevated in recent weeks as Iran has threatened to block the strait should the West impose tougher sanctions on its oil industry as part of a standoff over Tehran's nuclear program.
The narrow strip of water that separates Oman and Iran is the world's most important oil shipping lane, which connects the biggest Gulf producers such as Saudi Arabia, Iran, Iraq and the United Arab Emirates with world markets.
Flows through the strait are estimated at around 15 to 17 million barrels per day or just under a fifth of global supplies, and a new pipeline would bypass it to carry most of the UAE's oil, 1.5 million barrels per day, to global markets.
Mr Mohammed bin Dhaen al Hamli oil minister of UAE told reporters that "The pipeline is almost complete. Hopefully it will be operational within six months, by May or June 2012."
The previous deadline for the Abu Dhabi Crude Oil Pipeline project was set in April 2011.
Mr Hamli said that "There is delay; it is a lot of work. It is not only construction of the project, but it also has to be filled." He added that its capacity could go up to 1.8 million barrels per day.
The first tests have been done on the pipeline, industry sources said, adding that the first cargo from Fujairah was scheduled for May 2012.
Mr David Wech from JBC Energy consultancy said that "Iran's announcement that it will carry out another round of military exercises in the Strait of Hormuz in February 2012 kept crude prices near two month highs last week."
The pipeline would link state oil firm Abu Dhabi National Oil Company's Habshan oilfields to the port of Fujairah, one of the top three bunkering hubs and a major oil storage terminal outside the Straits and on the Gulf of Oman.
Abu Dhabi government owned International Petroleum Investment Company is undertaking the project, and China Petroleum Engineering & Construction Corporation is the engineering, procurement and construction contractor.
(Sourced from www.reuters.com)
