Israeli environmentalists applauded Thursday after a court dealt a blow to a controversial oil transport deal with the United Arab Emirates, agreed after the two countries normalised relations last year.

The deal would have seen Gulf oil brought to Israel's Red Sea port of Eilat by tanker, then moved overland by pipeline to its Mediterranean port of Ashkelon, for onwards shipment to Europe.

Environmental advocacy groups filed a petition in May to block implementation of the deal, citing risks to the northern Red Sea corals off Eilat.

The three organisations -- Adam Teva Vadim, the Society for Protection of Nature in Israel and Zalul -- argued that the government should not be allowed to increase the amount of crude transiting through Eilat, a pre-requisite for the UAE deal to be viable.

The groups withdrew their petition at a supreme court hearing in Jerusalem on Thursday after the government said it would accept the recommendations of the environmental protection ministry and not increase crude flow through the port.

"We welcome this significant achievement, which came following widespread public opposition to the (UAE) agreement," the groups said in a statement.

Minister for Environmental Protection Tamar Zandberg also welcomed the outcome.

"Israel cannot be turned into a dangerous and polluting oil transit hub," she said in a statement. "We will continue to protect the unique coral reef."

The ministry had long opposed the deal involving Israel's state-owned Europe-Asia Pipeline Company (EAPC) and an Israeli-Emirati company called MED-RED Land Bridge Ltd.

It had previously put a freeze on the agreement, citing the need for further environmental study.

EAPC and MED-RED did not disclose the amount of oil they intended to bring through Eilat, but without an increase of the import caps, there is likely to be little space for the deal to go ahead.

Zandberg said her ministry was committed to "stop the expansion of the EAPC's activities".

The oil agreement was one of several negotiated between Israeli and Emirati firms after ties were normalised under the Abraham Accords brokered by former US president Donald Trump.

Israel has estimated that trade between the countries could soon surpass $1 billion.

The UAE last year became the third Arab nation to establish full diplomatic relations with Israel after Egypt and Jordan, and was swiftly followed by Bahrain and Morocco.

Sudan also agreed to normalise ties with Israel under the Abraham Accords, but full relations have not yet materialised.

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