http://www.zawya.com/story.cfm/sidZW20070827000005/SecMarkets/pagMoney
Monday, Aug 27, 2007
(From THE WALL STREET JOURNAL)
By Matt Chambers
As tensions simmer between the U.S. and Iran, a big energy threat hangs over the world.
Iran has said that if the U.S. attacks, it will respond by disrupting trade through the Strait of Hormuz -- the narrow gateway that tankers use to bring oil from the Persian Gulf to the rest of the world. About two-fifths of the world's seaborne oil passes through the Strait.
Now sheikdoms in the United Arab Emirates -- the third-biggest OPECOPEC oil producer -- are looking at projects that would keep oil and commerce flowing if the Strait is blocked. The U.A.E. won't say the projects are a direct response to Iran's threats -- but the plans would clearly help in the event of an emergency.
Many of the plans center on the U.A.E.'s sleepy eastern coast, which is on the open-ocean side of the Hormuz choke point. Abu Dhabi, the key oil producer among the U.A.E.'s seven semi-autonomous enclaves, is planning an oil pipeline to the eastern emirate of Fujayrah, where it can be carried to the sea without passing through the Strait. And a host of other development is being considered for Fujayrah, including a larger port and the world's biggest liquefied-natural-gas storage and trading hub.
In terms of volume, blocking the Strait of Hormuz "is probably the biggest single energy-security risk that exists in the world," says Lawrence Eagles, head of oil markets at the International Energy Agency, the Paris-based energy watchdog for the world's most industrialized nations. "There is a lot of discussion on these issues, and from an energy-security perspective, it would be very welcome to have any opportunity to bypass the Strait of Hormuz."
For the IEA, the issue is an important one. In the event of an oil disruption, the IEA will likely release emergency stocks held by member countries of the Organization for Economic Cooperation and Development. While at the end of 2006 there were 1.5 billion barrels of oil in the emergency stocks, representing about 88 days of oil output through the Strait, this would take time to coordinate and distribute.
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