Hamad Hussain, climate and commodities economist at Capital Economics, has circulated a note answering key questions on the UAE’s exit from the OPEC oil group.
Today’s announcement is another sign that the UAE is willing to ruffle feathers within the Gulf Cooperation Council (GCC), especially when it comes to its relations with Saudi Arabia. The two countries were closely aligned when Saudi Crown Prince Mohammed bin Salman moved up the ranks of the royal family a decade ago. More recently, however, the two countries have increasingly found themselves at odds over a range of regional issues, including conflicts in Sudan and Yemen.
Saudi Arabia has also sought to challenge the UAE’s role as the region’s business and financial hub. The outbreak of the Iran war initially appeared to force the Gulf countries together. But the UAE has cut a frustrated figure as the war has dragged on, decrying the response from the rest of the GCC.
There’s clearly a risk that the UAE’s decision to leave OPEC adds to tensions with Saudi, and potentially the wider GCC. There’s a wide range of possibilities of how this could play out, from reduced cooperation over key issues to more extreme scenarios akin to the blockade of Qatar in 2017 -21. Either way, there could be disruptions to trade and investment flows.
The UAE’s stance on the Iran war, along with its decision to leave OPEC, could also be interpreted as further evidence that it is seeking to deepen ties with the US and Israel.
