UAE, Saudi, Oman likely to be less affected than neighbours in case of Hormuz closure: Moody’s
- Bahrain, Kuwait, Qatar and Iraq are more exposed to potential blockade of Strait of Hormuz
- UAE and Saudi Arabia have alternative routes for oil transport
- Oman’s major ports located outside of Gulf
Should geopolitical tensions between the US and Iran continue to escalate following oil tanker attacks in Gulf waters, Iran may choose to act on its threat of blocking passage through the Strait of Hormuz. In such a scenario, the oil exporting countries of Bahrain, Kuwait, Qatar and Iraq, which rely on the waterway for their energy trade, are likely to be more affected than the UAE, Saudi Arabia and Oman, according to a comment from Moody’s Investors Services.
The closure of the Strait, which is responsible for almost a third of the total global transport of oil and gas each day, would impact the foreign exchange and fiscal revenues of the four oil reliant economies, the global ratings agency says.
On the other hand, Oman’s key ports are located outside of the Gulf, so its exports are likely be unaffected. Saudi Arabia’s East-West pipeline system transports crude from the oil-rich Eastern province to the port of Yanbu on the Red Sea, whilst the UAE’s Habshan-Fujairah pipeline bypasses the Strait of Hormuz, connecting the oil fields in Abu Dhabi to the export terminal in Fujairah. These alternatives would thus provide some insulation to these countries in the event of a closure of the Strait.
Moody’s, however, sees a very low probability of a military confrontation in the region.
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