Drone Attacks on Fujairah Port Trigger Sharp Decline in UAE Oil Loadings, Disrupting Global Supply Chain

Summary

Drone attacks on the UAE's Fujairah port have caused oil loadings to plummet by 66% in the week of March 9-15, with volumes dropping from 1.9 million barrels per day to significantly lower levels. The attacks, which damaged two of eight storage tanks and removed 2 million barrels per day of storage capacity, have forced intermittent suspensions of operations at the Fujairah Oil Tanker Terminal and prompted ADNOC to divert crude shipments. The sustained attacks on port infrastructure and anchored vessels in the region have created a bearish outlook for Middle East crude exports, despite initial attempts by UAE's national oil company to mitigate disruption by redirecting barrels from other Gulf ports.

The security crisis is reshaping tanker operations and economics in the region. Insurance costs and time charter equivalent rates are climbing to record highs as vessel owners demand premium compensation for operating in the conflict zone. Industry players report confusion over ADNOC's flat pricing strategy for April loadings, with some interpreting it as a signal that cargoes will not be loaded, while ongoing attacks near Fujairah—including a strike on a Kuwaiti-flagged LPG tanker—continue to deter tanker operations. Middle East crude remains difficult to replace despite the disruption, though prolonged conflict could redirect export flows toward US crude and other alternative sources.

• Industry uncertainty over ADNOC's flat April pricing has led some market participants to believe no cargoes will load, signaling potential further disruption to global oil supplies
• Vessels anchored near Fujairah remain vulnerable, with a Kuwaiti LPG tanker struck by unknown projectile on March 17, raising broader security risks beyond port infrastructure