UAE’s Energy Market Amid Conflict

As the US-Iran war disrupts energy markets, cutting oil flows, damaging key infrastructure, driving massive increases in shipping and insurance costs, and impacting regional stability, the Gulf States are now recalibrating to maintain steady projects momentum.

The UAE continues to strengthen its position as a regional hub for infrastructure and energy. Supported by a significant sovereign wealth, deep fiscal buffers and national targets such as Net Zero 2050, the country is pushing forward with massive energy infrastructure programmes to expand fossil fuel export capacity, ensure secure supply routes, and power digital ambitions.

Abu Dhabi’s Abu Dhabi National Oil Company (ADNOC) is accelerating its plan to boost the country’s domestic manufacturing capabilities with $55 billion of spending across its upstream and downstream operations through to 2028. This expansion is part of a broader $150 billion five-year capital expenditure plan to enhance its operations, drive growth and meet global energy demand.

Up to 55-70% of the capital value for these downstream contracts is retained locally to support the UAE economy. The broader downstream and petrochemicals development is set to reach a production capacity of 4.7 million tonnes of chemicals annually by 2028.

To regain economic autonomy, the UAE made the historic sovereign decision to exit Opec and the wider Opec+ alliance, effective at the beginning of May. This move allows for independent production strategies to support long-term industrialization initiatives. On decision to exit Opec, Dr Sultan bin Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and Managing Director and Group CEO of the ADNOC, explained that the UAE wants “greater flexibility to invest, grow, expand, partner and create long-term value.”

“With demand for oil staying well above 100mbpd into the 2040s, the world needs more of what the UAE produces: the lowest cost, lowest carbon barrels out there. And now we will have the flexibility to place more crude with customers everywhere,” says Dr Al Jaber.

The Emirates is accelerating plans to raise Fujairah crude export capacity to as much as 4mbpd by 2027, as Abu Dhabi seeks to further reduce reliance on the strait of Hormuz.

Fujairah is the world's third-largest crude and refined products storage hub, giving the UAE additional flexibility to manage exports and commercial flows outside the Hormuz chokepoint. Adnoc is building a new West-East Pipeline project, which will double its current export capacity through Fujairah by 2027.

With energy security taking precedence globally, the UAE has secured major bilateral trade and supply agreements. Most notably, it has finalized strategic long-term crude supply and petroleum reserve pacts with India to secure reliable, long-term offtake.

Under net-zero plans, the country had already scaled its renewable energy capacity, but now clean energy initiatives are being treated as matters of national security and grid resilience. Huge investments are seen in solar, hydrogen and low-carbon infrastructure.

The EWEC (Emirates Water and Electricity Company) has unveiled plans to achieve 30 GW solar capacity in Abu Dhabi by 2035. The company is also advancing critical grid infrastructure, including the integration of more than 8 GW of long-duration BESS by 2035 to guarantee grid stability and secure supply.

Despite the regional uncertainty, the UAE project’s market is moving ahead with structured planning and timeframes

Editor