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Wednesday, Jul 02, 2025

Saudi-UAE Spat Is Not Over Despite OPEC+ Deal | OilPrice.com

Saudi-UAE Spat Is Not Over Despite OPEC+ Deal | OilPrice.com

The surprise resistance of the United Arab Emirates during the OPEC+ negotiations last month caught the oil market off guard, but the UAE-Saudi rift wasn’t much of a surprise to experts who have been following Middle East politics for years

The surprise resistance of the United Arab Emirates during the OPEC+ negotiations last month caught the oil market off guard, but the UAE-Saudi rift wasn’t much of a surprise to experts who have been following Middle East politics for years.

For two weeks in early July, allies Saudi Arabia and the UAE held the oil market—and oil prices—hanging on their spat over how much oil Abu Dhabi and other members of OPEC+ could pump as the alliance starts unwinding the remaining 5.8 million barrels per day (bpd) cuts.

While the disagreement took many market participants by surprise, for the analysts and experts who follow Middle East developments, it wasn’t so surprising that the growing economic and geopolitical competition between the two allies found an outlet in a seemingly minor issue such as whether the UAE could pump some more oil in the coming months.

Divergence Started Long Before OPEC+ Talks


The competition between the Saudis and the Emiratis has been there for years, analysts say, despite what has always looked like a ‘bromance’ between the de facto rulers of the two countries, MBS and MBZ, that is Saudi Crown Prince Mohammed bin Salman and UAE Crown Prince Mohammed bin Zayed.

The Saudis and the UAE are allies when it comes to countering Iran’s influence in the region, but they have diverging views on other geopolitical issues.

Saudi Arabia and the UAE also compete economically for foreign investment as they try to diversify their economies from too much oil dependence. At the same time, they are both looking to raise their respective oil production capacities in order to maximize oil sales before the energy transition eventually deprives them of some of their oil revenues.

In the OPEC+ talks last month, the UAE insisted on a higher baseline because it thought its 2018 baseline was inadequately low, especially in light of its ambition to raise oil production capacity to 5 million bpd by 2030 from around 4 million bpd now.


The two-week stalemate—which had some observers fear an implosion of the OPEC+ alliance as in March 2020—resulted in a compromise agreement.

Differences Are Here To Stay


However, the differences between Saudi Arabia and the UAE remain, and they have economic and geopolitical nuances.

The underlying tensions between Saudi Arabia and the UAE “have not gone away,” Amrita Sen, founder and director of research at Energy Aspects, told CNBC the day after the OPEC+ deal was announced.

The rift was the result of broader issues, not just a baseline production level in the OPEC+ agreement. The UAE has been seeking to come out of the Saudi shadow in regional economic and geopolitical affairs, Sen told CNBC.

“Competition between the two biggest Arab economies is, I think, just starting,” Abdulkhaleq Abdulla, a political science professor in the UAE, told CNBC earlier this month. “And it is bound to intensify in the days to come.”

“We are still in the first five minutes of the competition. We don’t know how it is going to evolve — and it might have some impact on the political issues that bind the two countries together, some political spillover,” Abdulla added.

It’s Not Just About Oil Quotas


What the world saw as a spat over several hundred thousand oil barrels per day was actually a rift years in the making, experts on the Middle East say.

“Widespread surprise at the seemingly sudden disagreement between Abu Dhabi and Riyadh is rooted in misapprehension about the relationship between the two countries in recent decades. It has been a common assumption that the UAE and Saudi Arabia have effectively indistinguishable worldviews and interests – that the UAE is sort of an appendage or dependency of Saudi Arabia. That has never been the case,” Hussein Ibish, Senior Resident Scholar at the Arab Gulf States Institute in Washington, wrote in July while the OPEC+ spat was still on.

According to the expert, long-standing but underappreciated differences between the UAE and Saudi Arabia have become more obvious, but their continuing shared interests remain decisive.

Some geopolitical differences are blatantly obvious. Unlike Saudi Arabia, the UAE has largely wound down its military activities in Yemen and it also recognized Israel last year.

On the economic front, Saudi Arabia and the UAE are competing for foreign investments, not only in oil.

Saudi Arabia moved earlier this year to challenge Dubai and Abu Dhabi’s long-standing leadership in the Middle East in attracting foreign capital and companies by announcing that as of January 2024 it would not sign contracts with foreign firms which don’t have their regional headquarters in Saudi Arabia.

“The divisions between the UAE and Saudi Arabia are real and significant, and they have the potential over time to grow into deeper rifts,” Ibish from the Arab Gulf States Institute in Washington wrote.

However, the two countries have compatible broader regional goals, including the fact they are pro-US and share the major concern in the Middle East about Iran and its proxies in the region, Ibish noted.

Saudi Arabia and the UAE “have increasingly become rival allies,” David Ottaway, Middle East Fellow at the Wilson Center, wrote last month.

“The UAE is charting its own course on more and more issues, its demand to produce more oil than Saudi Arabia wanted is only the latest example of their sharpening contest for Arab and global prominence,” Ottaway says.

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