As Rivals Compete to Tap Oil Profits, Iran Quietly Neutered

If you’re trying to determine what’s next for oil prices, there’s something you should know that very few people are talking about.

Despite tensions in the MidEast, oil may not go a lot higher, even if the situation escalates.

That’s in part because Iran is being quietly but effectively neutered by a region in the MidEast called Fujairah. They just opened a new pipeline that could be a game changer.

The 48 inch diameter pipeline will transport oil from Abu Dhabi’s oil fields in the southwestern part of the UAE to Fujairah on the Emirates’ eastern coast, bypassing the Strait of Hormuz.

And that effectively could neuter Iran’s influence in the world oil markets because it reduces the need to assuage Teheran to gain access to the shipping lanes.

“The new pipeline can handle a 150,000 barrels a day. That’s not a small amount of oil,” explains CNBC Contributor Addison Armstrong of Tradition Energy on CNBC's Fast Money.

And equally important to the oil trade; “Iraq is now up to 2.5 million barrels a day. They’re trying to move oil too,” Armstron adds. “They’re trying to move oil through Saudi Arabia. That hasn’t been done since the First Gulf War.”

In other words, “All the physical infrastructure that can be leveraged in the Middle East to forgo putting oil on tankers and shipping it through the Strait of Hormuz is in play.”

Combine these developments with relatively weak fundamentals and Armstrong doesn't think oil can trade much above $100.

* You can find our conversation about oil with Addison Armstrong about 3 minutes into this video clip.

Posted by CNBC's Lee Brodie

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Trader disclosure: On July 19, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Tim Seymour is long FCX; Tim Seymour is long YUM; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Jon Najarian is long AAPL CALL SPREADS; Jon Najarian is long IBM CALL SPREADS; Jon Najarian is long AMZN CALL SPREADS; Jon Najarian is long GOOG CALL SPREADS; Jon Najarian is long MSFT CALLS SPREADS; Jon Najarian is long INTC; Jon Najarian is long CIGX; Jon Najarian is long CME; Jon Najarian is long CBOE; Jon Najarian is long GLUU; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long USB; Joe Terranova is long GS; Joe Terranova is long JPM; Joe Terranova is long YHOO; Joe Terranova is long SBUX; Joe Terranova is long NKE; Joe Terranova is long WFM; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long NXPI

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