Why Fujairah Has Become the Gulf’s New Strategic Hotspot

**Tim Elliott** (0:00)
This is the Morning Drive, it's Mira Business FM. Next up, the Gulf's new strategic hotspot, as tensions reshape global trade and energy routes, and energy security dominates the boardroom agenda, all eyes have turned towards a critical, but often overlooked hub situated outside the Strait of Hormuz, which is the emirate of Fajira. Strategic value has shifted from Fajira being just a regional port, suddenly it's become a global talking point. So, here to discuss the growth in the emirate's strategic importance, what that means for shipping, what it means for oil markets, and I guess the wider Gulf economy is Frank Kane. Frank is editor-at-large at Arabian Gulf Business Insights, joins us this morning.
Frank, how are you?

**Frank Kane** (0:50)
I'm great, Tim, thanks. Nice to see you again.

**Tim Elliott** (0:52)
Good to see you. It's been a long time. I want to, before we jump in to, I want to really examine Fijira, if you like, a little bit, but I'm interested in your thoughts on developments this weekend, the whole deal that apparently we're seeing signed electronically that's going to be signed formally on Friday.

**Frank Kane** (1:12)
Well, I think we have to take it, don't we?
We all want peace. The alternative is not a very nice prospect for the conflict and violence here, which has been very damaging for the past few months. So we'll take it. But most of the people that I've spoken to in the oil trading world and geopolitical world, they are quite skeptical that this is a long lasting peace. This is a memorandum of understanding, remember? And what MOUs tell you is where people agree, not where they disagree.
And there are lots of areas of disagreement here still to be worked out. So I'm skeptical. We'll talk about Hormuz, I'm sure, in the context of Fujairah, but in particular, the idea that suddenly you can start the engines and all the ships and let the oil flow. I think that that's quite impractical, really. But most of the experts in the energy world and in the shipping world and in the marine insurance world, they all think it will be weeks or months rather than days. It will not happen quickly.

**Tim Elliott** (2:26)
It's not a matter of just turning back on a tap, is it? That's the point.

**Frank Kane** (2:30)
Absolutely, yeah. The global energy industry is extremely complicated. You can't turn it on and off like a switch. Lots of oil wells have been plugged, as they say. There's lots of crude floating or in storage on the western side of Hormuz.
The ships aren't here. The ships are all headed to America, which is where the action was after the strait closed. So lots of those ships have to come back, pick up cargoes or get ready-made cargoes out.
And it will be some time before we see a real difference. Some in the oil market, and I think that this is, has been reflected in the way that oil prices have fallen over the past couple of days. Some think that there will be a tsunami of crude heading through Hormuz. I don't think that will be the case. And most traders would tend to agree with that. It will not be so quick.

**Tim Elliott** (3:33)
I mean, oil prices this morning is around about the 80-82 dollars per minute. It's a significant way down.

**Frank Kane** (3:42)
Yeah, when you think the height was in the middle of March when it hit 126, and people were then talking about 150-200 for sometime this year, the summer, that seems to be headed off, and thank god that that equaled global catastrophe. Demand destruction all over the place, global economic recession. So we're lucky that that hasn't happened, and around about the 80-dollar mark, most Gulf producers could live with that as a reasonable medium to long-term prospect. So that's okay. As I said, we'll take that.
But there are lots of things that could go wrong with this peace deal, not least, of course, the involvement of Israel, who have expressed their dislike, in principle, I think, of the idea.
That could blow up anytime. We don't know how it's gonna go down in the USA either, because a long-term peace deal would require congressional approval. Some elements of the Republican Party think that this is too much of a concession. When you think that Trump said unconditional surrender just a few weeks ago, this almost looks like unconditional surrender the other way around, if you like. And then, for the region, JD. Vance yesterday gave an interview where he said that the Gulf countries would be taking part in a $300 billion reconstruction fund for Iran. I wonder how many people have asked the Gulf countries about this. Do they really want to be giving money to the country that's been, you know, lobbying missiles at them for a few weeks?