The Hormuz crisis is an ‘everything story’ threatening the global economy, warns H.E. Dr. Sultan
Energy security is no longer just about securing supplies but all about resilience, infrastructure, technology and the ability to adapt at speed – and the world urgently needs more investment in energy as AI surges and emerging markets grow, according to H.E. Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and ADNOC Managing Director and Group CEO.
These are the reasons why the UAE is doubling down across the value chain and building partnerships to drive an energy secure, prosperous future, H.E. Dr Al Jaber told the Atlantic Council on Wednesday during a virtual interview on the state of global energy markets amid geopolitical disruption, and how to achieve energy security, stability, and resilience in an era of volatility and uncertainty.
In a wide-ranging conversation with Helima Croft, Managing Director and the Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, H.E. Dr Al Jaber also laid out the staggering macroeconomic toll of the closure of the Strait of Hormuz – from soaring inflation to severe energy under-investment, and described the ensuing energy crisis as an “everything story” that threatens the entire modern supply chain.
Despite these unprecedented challenges, H.E. Dr Al Jaber highlighted ADNOC’s operational resilience and explained the strategic rationale behind the UAE’s historic decision to exit OPEC and OPEC+. He also invited the energy industry to convene in Abu Dhabi in November to participate in ENACT and ADIPEC to better understand the lessons from the energy crisis and develop new avenues of long-term collaboration.
Here are edited excerpts from the conversation:
You have been extremely vocal about the cost to the global economy of the closure of the Strait of Hormuz. Can you give us your latest thoughts on the cumulative impact of this crisis?
The closure of [the Strait of] Hormuz is the most severe supply disruption on record. So far, the world has lost over a billion barrels of oil. And that number goes up by almost 100 million barrels every single week. Brent is trading at 40% above pre-closure levels. And Hormuz, as we all know it, is not just an oil story. It is, in fact, an everything story. Think about it. We're talking LNG, jet fuel, fertilisers, ammonia, urea, aluminium, helium, critical minerals, plastics, consumer goods, and other general cargo products. In other words, the entire supply chain of the modern global economy from the food on your table to the planes in the sky to the chips in your phone. Fuel prices are up 30%, fertilisers are up 50%, airfares are up 25% – every farm, every factory, every family is paying the price and the ones who are most vulnerable end up carrying the heaviest load.
And this is now flowing into the macro numbers.
Global growth outlook has been cut to 3.1% for 2026. Inflation is already pushing past 4%. One stat really stands out. Just over 80 days into this conflict and almost 80 countries have now taken emergency measures to support their own economies. Even if this conflict ends tomorrow, it will take at least four months to get back to 80% of pre-conflict flows. And full flows will not return before the first or even second quarter of 2027.
"When it comes to ADNOC, as you know, some of our facilities were directly targeted and our infrastructure was directly hit. But this is exactly the kind of scenario our systems have been tested to withstand. We kept supplies flowing and worked closely with our partners and with our customers, shipment by shipment, to meet demand wherever we could. We redirected volumes through the East Coast and used our global trading network to secure additional supplies for our customers across Asia."
This is not just an economic problem. In fact, this sets a dangerous precedent. Once you accept that a single country can hold the world's most important waterway hostage, freedom of navigation as we know it is just finished. If we don't defend this principle today, we will spend the next decade defending against the consequences.
The costs you've laid out are absolutely stunning and I would argue still underappreciated by many watchers of this war. I want to ask you specifically about the impact on the UAE.
I'm sure everyone here knows how well we managed the situation. But yes, and of course, we were affected. And I am sure you will agree that this was an illegal, erratic, unhinged and unprovoked attack. We never called for this. In fact, we did everything to prevent it from happening.
The UAE was targeted by more than 3,000 missiles and drones, more than any other country in this conflict. Every single target was civilian, airports, terminals, refineries, gas-processing plants, residential areas, shopping malls, and most recently, the Barakah nuclear power plant. Now, whether carried out directly or through proxies, this was a terrorist act and a dangerous escalation. It showed a criminal disregard for civilian lives in the UAE and across the region.
And what we will remember from these months is not the missiles or the drones. It is in fact the millions of small acts of courage by people, nationals and residents, who kept our country running. And I am sure that you would agree this is a testament to the UAE's leadership that put people above everything else.
Could you talk more specifically about ADNOC operations? Can you talk about how your company has been resilient through this crisis?
When it comes to ADNOC, as you know, some of our facilities were directly targeted and our infrastructure was directly hit. But this is exactly the kind of scenario our systems have been tested to withstand.
We kept supplies flowing and worked closely with our partners and with our customers, shipment by shipment, to meet demand wherever we could. We redirected volumes through the East Coast and used our global trading network to secure additional supplies for our customers across Asia.
We are also working with our partners, in particular our partners in Asia to expand and restock strategic storage to strengthen resilience against future shocks. And we continue to adapt our commercial strategy to ensure our products remain very competitive, reliable, and attractive to customers around the world.
The best proof of how we have adapted to the situation is in our financial results. Even in this environment, every one of our listed companies has achieved strong returns, many of them outperforming market expectations and analysts. That tells you something important about the robustness of our business, the strength of our strategy, and the strength of our nation.
In March, you talked about the lessons that we need to learn from this experience. Can you talk about how we come back from this better?
A few things have really stayed with me from the last few months. First, resilience matters a great deal. In fact, it is a critical success factor. It may seem expensive until the day you need it. And when you need it, it becomes priceless.
Second, AI must be built in, not bolted on. In a crisis, the speed of insight and the speed of decision-making is the difference between continuity and disruption.
Third, energy security is no longer just about the ability to continue to produce. It is about routes, access, storage and redundancy. Right now, too much of the world's energy still moves through too few choke points. That is exactly why the UAE made the decision more than a decade ago to invest in infrastructure that bypasses the Strait of Hormuz. And it is why we moved ahead with our second pipeline in 2025. Today it's already almost 50% complete and we are accelerating its delivery toward 2027.
And that leads me to one of the biggest lessons, investment. As a sector and as an industry, we are dangerously under-invested. Upstream investment is sitting at around $400 billion a year, which barely offsets natural decline rates. Global spare capacity is around three million barrels a day. It should be closer to five. And in just two months, the world drew down around 250 million barrels from storage. We have 30 to 35 days of effective cover. We need to at least double that.
And one final lesson this period revealed is who our real and true partners are. When the pressure rises, you quickly see who stands firm, who stands with you, who actually steps up and shows up. In a crisis, partnerships are your real strategic reserves. A lot of lessons were learned, and I am very much counting on all of you coming to Abu Dhabi in November to participate in ENACT and ADIPEC in order for us to be able to drill down and get an engagement that will allow us to better understand these lessons learned and develop new avenues of developing long term solutions.
There has been a lot of conversation about the UAE's decision to exit OPEC and OPEC+. Can you walk us through the sort of rationale behind that decision and what you hope will be the benefits of taking that choice?
The UAE is entering a new chapter of growth. This was a sovereign strategic decision made with clarity, passion, conviction and full confidence. We want greater flexibility to invest. We want greater flexibility to grow, to expand, to partner, and to create long-term value. Because ultimately, real strength is not measured by the abundance of resources, but by how they are harnessed to serve the nation. It is about how you use them to build industries, create opportunities, and safeguard the economy for future generations.
The bottom line is we didn't move away from something. We moved toward something. We are moving toward a world that needs more energy. With demand for oil staying well above 100 million barrels into 2040s, the world needs more of what the UAE produces. And that is the lowest cost, lowest carbon barrels out there. And now we will have the flexibility to place more crude with customers everywhere.
"And one final lesson this period revealed is who our real and true partners are. When the pressure rises, you quickly see who stands firm, who stands with you, who actually steps up and shows up. In a crisis, partnerships are your real strategic reserves. A lot of lessons were learned, and I am very much counting on all of you coming to Abu Dhabi in November to participate in ENACT and ADIPEC in order for us to be able to drill down and get an engagement that will allow us to better understand these lessons learned and develop new avenues of developing long term solutions."
At the same time, we in the UAE need more energy to move at the speed of our ambition. In particular, natural gas is increasingly strategic, not only for our business, but for power generation, AI infrastructure, manufacturing, advanced industries and economic growth.
Ultimately, this was not a reaction or a rupture and not directed against anyone or any institution. For us, responsibility does not end with membership. Outside OPEC, the UAE will remain what it has always been, a disciplined, responsible, credible reliable and a stabilising force in the global energy markets. We will keep engaging, we will keep talking, and we will keep showing up for our friends and partners when and wherever they need us.
Can you talk about the relationship with the United States? How has it evolved and where do you see it going? And how does it encompass all the things you've talked about in terms of AI, investment, security?
The relationship between the United Arab Emirates and the United States is becoming more integrated, more ambitious, and more consequential every year. We have a strategic partnership across technology, investment, industry, infrastructure, energy, defence, and much more.
Last year, bilateral trade reached a record of $39 billion. And the UAE remained America's largest export market in the Middle East for the 17th consecutive year. The investment story is even more impressive. We have invested more than $1 trillion in the United States, with more to come over the next decade. Our energy investments, for example, through ADNOC, XRG and Masdar now total more than $85 billion across 19 states.
The US remains a top investment priority for us simply because of its unique infrastructure, its unique combination of rich energy resources, deep capital markets, and pro-investment regulation. Through XRG, we already have significant assets from the Rio Grande LNG terminal to 18 chemical sites across the US through Nova Chemicals, Covestro, and Borouge. And we are currently proactively and actively exploring opportunities with many of our partners. Some of them do exist as partners and some new partners.
Our approach is simply across the whole energy value chain, with special emphasis on the gas value chain from upstream shale to regasification terminals and the distribution network. And of course, our relationship extends beyond energy. This includes AI and AI infrastructure, data centres, semiconductors, advanced manufacturing, critical minerals, financial services, and much more.
We invest in America because we believe in America. We believe its energy resources, its capital markets, its innovation ecosystem, and its people, and the quality of the ecosystem that has been created that helps attract investments. The UAE and the United States are not just trading partners. We are co-investors in the economy of the next century. And that is a partnership built on trust, not on transactions.
