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UAE, S. Korea Sign MoU to Build World’s Largest Underground Project for Oil Storage

Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and President of S. Korea Moon Jae-in at the signing ceremony (Asharq al-Awsat)
Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and President of S. Korea Moon Jae-in at the signing ceremony (Asharq al-Awsat)
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UAE, S. Korea Sign MoU to Build World’s Largest Underground Project for Oil Storage

Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and President of S. Korea Moon Jae-in at the signing ceremony (Asharq al-Awsat)
Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and President of S. Korea Moon Jae-in at the signing ceremony (Asharq al-Awsat)

The Abu Dhabi National Oil Company (ADNOC) announced that it is building the world’s largest single underground project ever awarded for oil storage, with a capacity of 42 million barrels of crude oil in Fujairah on the eastern coast of the UAE valued at $1.21 billion.

An Engineering, Procurement, and Construction (EPC) contract has been awarded to South Korea’s SK Engineering and Construction (SKEC) to construct the three underground storage caverns, each with a capacity of 14 million barrels, deep below ground level.

The contract is the largest for a single project award for underground crude oil storage in the world with approximately 50 percent of the contract spend feeding back into the UAE economy through ADNOC’s In-Country Value program.

The agreement was signed in the presence of Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces Sheikh Mohamed bin Zayed Al Nahyan, and President of S. Korea Moon Jae-in at the Blue House, in Seoul.

Through the agreement, the UAE aims to strengthen its position as a reliable supplier of crude oil as well as give ADNOC greater flexibility, allowing it to manage and optimize its delivery schedule and support its broader move into trading. This will also enhance its position as one of the key trading and supply partners in Fujairah’s growth as a global oil and products storage and trading hub.

The agreement was signed by UAE Minister of State and ADNOC Group CEO Sultan Ahmed al-Jaber and SKEC President & CEO Jae Hyun Ahn.

The construction of the world’s largest single underground project ever awarded for oil storage will enhance the UAE’s energy security, in line with the wise guidance of the country’s leadership, stated Jaber.

He added that developing this strategic oil storage mega facility in Fujairah will also support and further enable broader trading ambitions, strengthening the company’s ability to respond efficiently and competitively to the needs of the customers, while also providing it with greater flexibility to proactively respond to market needs and commercial opportunities.

“This project is a testament to the strong strategic partnership between UAE and South Korea and to the capability of SK Engineering and Construction Co. Ltd, given the scale, sophistication, and value of this construction”

In 2018, the works commenced and the first phase of the ADNOC Fujairah Underground Storage, involving the construction of an access tunnel, were completed.

When complete in 2022, the ADNOC Fujairah Underground Storage will be one of the largest facilities of its kind in the world and able to store three different types of crude oil, providing ADNOC with increased flexibility to export crude through Fujairah’s Arabian Sea oil terminal.

SKEC CEO also commented on the agreement saying: “We are progressing well in our project with ADNOC in the construction of the world’s largest single storage facility in hard rock, located in Fujairah.”

He asserted that SKEC is committed to providing high-quality services, as well as supporting the local UAE economy.

The EPC contract award followed a robust tendering process that included a rigorous assessment of how much of the contract value would support the growth and diversification of the UAE’s domestic economy through ADNOC’s In-Country Value program.

About $600 million are expected to flow back into the UAE’s economy, and the contract will give a significant stimulus to the country’s products and services, manufacturing and assembly and infrastructure sectors, as well as creating additional employment for UAE nationals.

Earlier in November, ADNOC signed a MoU with Indian Strategic Petroleum Reserves (ISPRL) to explore storing ADNOC crude oil at ISPRL’s underground storage facility at Padur in Karnataka, India.

This agreement followed the arrival of the final shipment of the initial delivery of ADNOC crude to be stored in another ISPRL underground facility in Mangalore, earlier the same month.

ADNOC also stores up to 6.29 million barrels of crude oil at the Kiire oil terminal in Kagoshima, southern Japan, under an agreement with Japan’s Ministry of Economy, Trade, and Industry.

Korean companies are also important customers of ADNOC’s crude oil and refined products, including LPG, base oil, naphtha, and fuel oil.

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Middle East War Reshaping National Energy Strategies, Says IEA

An empty fuel station, as India faces rising oil prices following the closure of the Strait of Hormuz amid the US-Israeli conflict with Iran, in Halvad, Gujarat, India, May 22, 2026. (Reuters)
An empty fuel station, as India faces rising oil prices following the closure of the Strait of Hormuz amid the US-Israeli conflict with Iran, in Halvad, Gujarat, India, May 22, 2026. (Reuters)
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Middle East War Reshaping National Energy Strategies, Says IEA

An empty fuel station, as India faces rising oil prices following the closure of the Strait of Hormuz amid the US-Israeli conflict with Iran, in Halvad, Gujarat, India, May 22, 2026. (Reuters)
An empty fuel station, as India faces rising oil prices following the closure of the Strait of Hormuz amid the US-Israeli conflict with Iran, in Halvad, Gujarat, India, May 22, 2026. (Reuters)

The Middle East war is pushing countries to open new supply routes and turn to domestic resources to tide over the world's biggest energy crisis, the International Energy Agency said Thursday.

"We are in the midst of the largest energy security crisis the world has ever faced -- and I believe this will reshape investment strategies globally, with parallels to the major changes the energy world witnessed after the oil shocks of the 1970s," said IEA executive director Fatih Birol

"We are already seeing intensified efforts by both producer and consumer countries to diversify trade routes and energy sources -- such as advancing new pipelines and other supply infrastructure, on the one hand, and turning more to domestically available resources, on the other," he added in the World Energy Investment report by the energy agency of the Organization for Economic Co-operation and Development (OECD).

The IEA estimates that global energy investment will reach $3.4 trillion in 2026, slightly higher than the previous year, with around $2.2 trillion devoted to power grids, storage, low-emission fuels, nuclear, renewables, energy efficiency and electrification.

Alongside this, around $1.2 trillion is expected to be invested in oil, natural gas and coal.

It nevertheless expects oil investment to decline for the third straight year in 2026, falling below $500 billion despite rising crude prices.

This is due to uncertainty over how long higher prices will last, project lead times, supply constraints and the tightening offshore rigs market, which are limiting short-term investment outside the Middle East.

By contrast, investment in natural gas is "projected to rise to $330 billion, the highest level in a decade, supported by a wave of new LNG export projects, particularly in the United States and Qatar," IEA said.

At the same time, oil-importing countries are turning to energy sources available domestically, notably renewables, nuclear and coal, the report said.

The IEA estimates that investment in renewables should reach around $665 billion in 2026, including $365 billion for solar alone.

Investment in nuclear energy and is set to exceed $80 billion annually while investment in coal should reach $180 billion -- the highest in 10 years, it said.

China alone will account for nearly 70 percent of global coal supply spending, and some Asian countries may seek to extend the operation of their existing coal-fired power plants in order to strengthen their energy security.

The IEA said investment in electricity supply and infrastructure is expected to reach nearly $1.6 trillion in 2026, including around $550 billion for power grids, while investment in battery storage should exceed $100 billion.

Business

ECB Chief Economist Sees Persistent Impact on Inflation from Iran War

The Euro currency symbol is seen prior to a press conference after an ECB's governing council meeting in Frankfurt, Germany, Dec. 18, 2025. (AP)
The Euro currency symbol is seen prior to a press conference after an ECB's governing council meeting in Frankfurt, Germany, Dec. 18, 2025. (AP)
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ECB Chief Economist Sees Persistent Impact on Inflation from Iran War

The Euro currency symbol is seen prior to a press conference after an ECB's governing council meeting in Frankfurt, Germany, Dec. 18, 2025. (AP)
The Euro currency symbol is seen prior to a press conference after an ECB's governing council meeting in Frankfurt, Germany, Dec. 18, 2025. (AP)

The energy shock caused by the Middle East conflict will likely have a persistent impact on inflation even if there is a quick solution to the war, the European Central Bank's chief economist, Philip Lane, said on Thursday.

While oil prices historically tended to revert to original levels after a burst of increases, the current episode may be different as energy costs may stay elevated with countries restocking inventory or diversifying their energy mix, he said.

"We had ‌an overnight, fairly ‌quick and big decline in global oil ‌supply, ⁠which has been ⁠masked until now by inventories," Lane said at a conference hosted by the BOJ and its think tank in Tokyo.

"Even if the initial energy shock starts to reverse, the second round (effects) will be with us for a while," he said.

With the energy shock pushing up prices, financial markets have fully priced in ⁠two hikes in the ECB's 2% deposit ‌rate and see a roughly 50% ‌chance of a third move over the next year. Economists are more ‌cautious and see just two hikes, followed by a cut ‌in mid-2027, a Reuters poll showed.

Lane said there could be some policy lessons from past energy shocks, such as that rising energy costs could push up inflation abruptly and cause "all sorts of non-linear" mechanisms ‌that broaden price hikes.

"But it's not the same non-linearity we had four years ago," when ⁠supply disruptions ⁠from the Ukraine war and strong demand from the COVID re-opening pushed up inflation, he said.

Central banks must acknowledge any substantial shocks and their potential impact on inflation, but avoid overreacting in setting monetary policy, Lane said.

"You have to be skillful in terms of looking at monetary transmission, consumer confidence and all these different mechanisms," he said.

While some inflationary pressures from a supply shock do calm down over time, it was important for central banks to make sure "there's no persistent belief in the population or among price-setting sectors that inflation is going to be too high for too long," he said.

Business

Dollar Firms to One-Week High as Gulf Tensions Flare, Yen Nears Intervention Zone

US dollar banknotes are seen in this illustration taken March 24, 2026. (Reuters)
US dollar banknotes are seen in this illustration taken March 24, 2026. (Reuters)
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Dollar Firms to One-Week High as Gulf Tensions Flare, Yen Nears Intervention Zone

US dollar banknotes are seen in this illustration taken March 24, 2026. (Reuters)
US dollar banknotes are seen in this illustration taken March 24, 2026. (Reuters)

The dollar firmed to a one-week high on Thursday after Middle East tensions ratcheted up following fresh US strikes on Iran, while the yen softened toward a level that triggered central bank intervention last month.

Iran's Revolutionary Guards said they targeted a US airbase after what they described as an early morning US attack near Bandar Abbas airport, Tasnim news agency reported, while Kuwait's army said its air defenses were intercepting hostile ‌missile and ‌drone threats.

That followed news that the US military ‌carried ⁠out new strikes targeting ⁠an Iranian drone operation that it said posed a threat to US forces and commercial shipping in the Strait of Hormuz.

Oil prices rebounded and the safe-haven dollar steadied as hopes of a swift resolution to the war faded, with investors now increasingly expecting the greenback to break higher as the Federal Reserve shifts its focus to battling inflation amid elevated energy prices.

"Geopolitics and ⁠the subsequent inflation risks remain a key concern," Alex ‌Saunders, Citi's head of global quant ‌macro strategy, wrote. "We continue to see a trim in the USD underweight."

The euro was 0.2% ‌lower at $1.1600, while the pound was down nearly 0.3% at $1.3392.

The risk-sensitive ‌Australian dollar weakened 0.4% to $0.7111to a one-week low, and the New Zealand dollar was down 0.3% at $0.58831.

The dollar index, which measures the greenback's strength against a basket of six major peers, strengthened 0.17% to 99.464, near its highest level since ‌May 21.

Markets will now look ahead to today's release of the Fed's preferred inflation gauge, the core PCE ⁠deflator, which ⁠will help shape the broader interest rate outlook.

The yen weakened to as far as 159.610 per dollar on Thursday, the lowest since April 30 and within sight of the 160 level that triggered intervention by Japanese authorities last month.

That intervention bought policymakers some breathing room, but questions linger over its lasting impact, said Tony Sycamore, market analyst at IG.

"The broader question is whether it was worth it for what essentially amounts to just a single month's relief. And furthermore, will authorities have the stomach to write a similar-sized cheque if the 160 level is breached again in the coming sessions?" he said.

Markets are pricing a roughly 70% chance of a quarter-point interest rate rise at the BOJ's June 15–16 policy meeting, LSEG data showed.