The Crux of the UAE-Saudi Dispute

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OPEC members have lately failed to agree on an oil production ceiling on the 18th OPEC and non-OPEC Ministerial Meeting that ended in acrimony between the United Arab Emirates (UAE) and Saudi Arabia. Oil output is not the only bone of contention between Abu Dhabi and Riyadh. 

The tip of the iceberg

OPEC+ except for the United Arab Emirates agreed to an easing of cuts and their extension to the end of next year, according to “Reuters” citing an OPEC+ source. The UAE said the extension is conditional to revising its baseline production, “Reuters” reported.

According to “Reuters”, OPEC kingpin Saudi Arabia and non-OPEC leader Russia had also proposed extending the cuts until the end of 2022.

The UAE, according to “Reuters”, is opposed to these measures since OPEC+ should shift the foundation for reduction, essentially enhancing its output limit.

In 2009, the UAE pulled out of the Gulf Arab Monetary Union proposal, putting the long-struggling effort on hold and casting doubt on the viability and influence of any future union.

For almost a decade, Gulf oil exporters such as the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, and Bahrain have attempted to create a unified currency that some politicians thought would eventually be freely floated globally.

However, a project that would have allowed the world's largest oil-exporting region to work as a unified economic force has been crippled.

A history of disputes

The tension in the relations between Saudi Arabia and the UAE goes back to a border dispute, which began with the setting of the borders of the Kingdom of Saudi Arabia by its founder, Abdulaziz Al Saud, and its expansion towards the territories of the Emirates, Qatar and the Sultanate of Oman. Moreover, the dispute is also concerned with the ownership of the “Buraimi” oasis. It continued to rumble on for many years until settled in 1974 by virtue of an agreement, known as the Treaty of Jeddah, between Sheikh Zayed (then President of the UAE) and King Faisal of Saudi Arabia, according to historical recounts.

With the ascension of King Salman bin Abdulaziz to the throne of Saudi Arabia and the installation of his son Muhammad as Crown Prince, it appeared that relations between the two countries had taken on a new tone.

However, divisions rapidly emerged, especially after the Saudi-led aggression on Yemen. The war against the Islah Party in Yemen (a branch of the Muslim Brotherhood) is one of the UAE's priorities. On the other hand, Riyadh accommodates the party's leaders and works with its military troops on the ground to help Yemeni President Abd Rabbuh Mansour Hadi's forces.

After years of war against Yemen, the UAE realized that Saudi Arabia had sunk into the Yemeni quagmire, so it officially announced in July of the year 2019 its withdrawal. The UAE stated that the reasons for this decision were "strategic and tactical", while it had taken control of areas it considered vital  in southern Yemen, Socotra Island, and Al-Mahra Governorate, in addition to controlling strategic Yemeni airports and ports overlooking the Arabian Sea and the Gulf of Aden, as well as gas and oil fields in the eastern governorates, which of course does not suit Saudi Arabia.

Yemen: The battle of wills

In Yemen, the United Arab Emirates and Saudi Arabia are already competing over dominance. The former “regional allies” joined together in 2015 to launch an aggression on Yemen and reinstate the Riyadh-approved government of Abdrabbuh Mansour Hadi, but years down the line, they appear to be at odds over the country's future, adopting two opposing paths.

The UAE has sponsored the South Transitional Council (STC), a group that has turned its guns on the Saudi-backed Hadi Government, fighting Hadi forces and declaring self-rule in the southern region. Now the STC and the Hadi regime are involved in tit-for-tat street battles. In a nutshell, the unraveling relationship between the two regional allies is fast transitioning into a grisly series of clashes on different fronts.

Qatar's Blockade 

As tensions escalate between Qatar and the Gulf states, including Egypt, the Emirati involvement in supporting and inciting the blockade of Qatar became obvious, prompting Qatari media to blame the Emirates as the result.

With the normalization of relations between Saudi Arabia and its allies on the one hand, and Qatar on the other, it seemed that relations with the UAE are still cold, and have not returned to normal. Returning to the "Financial Times" report and what it reported on this particular subject, the newspaper says: "Abu Dhabi is concerned about the speed of reconciliation with Doha," considering that Qatar's return to its previous relationship with Saudi Arabia will bring together the views between Saudi Arabia and Iran or between Saudi Arabia and Turkey.  All of this will happen at the expense of the Emirati role, which appears to be regressing, especially after the recent normalization step with "Israel".

Growing Tensions

The disagreement between Abu Dhabi and Riyadh isn't only about borders or oil production. The international media quickly caught these flares and started circulating a deterioration in Saudi-Emirati relations on more than one level.

The "Financial Times", a prominent British newspaper, indicated that the UAE's ambition to enhance production capacity has was accompanied by a deterioration in Saudi-Emirati relations.

“In the past few days, however, cracks in this unity have become apparent as the interests of Riyadh and Abu Dhabi diverge again on issues ranging from oil production, Yemen, normalization with “Israel”, and the way to handle the pandemic,” the newspaper added.

According to insiders, a dispute has erupted at the top echelons of Abu Dhabi's national oil firm regarding whether or not to leave the cartel. A withdrawal would allow the UAE to fund initiatives to diversify its economy, ranging from refinery and petrochemical output to a newly formed commodities market and its own crude benchmark, both of which require access to volumes of material to succeed.

Furthermore, the UAE's exit from the cartel might ignite a free-for-all production, thus, undermining the objective of Opec+, according to energy specialists.

Flights Suspended

Saudi Arabia has suspended flights to three countries, including the UAE, for alleged protection against a coronavirus variant, the Interior Ministry said Saturday.

Flights to and from the UAE, alongside those to Ethiopia and Vietnam, will be suspended, an interior ministry official said, quoted by the state news agency “SPA”.

Besides, Emirates Airlines decided to suspend all passenger flights to and from the Kingdom of Saudi Arabia until further notice, according to the Emirati newspaper, Al Bayan.

The company said, in a press statement, that the suspension decision, which will take effect from Sunday, July 4, 2021, at 23:00 local time, came by the instructions of the Saudi General Civil Aviation Authority.

And it stressed that passengers who arrive in Saudi Arabia as their final destination on or after July 5, 2021, will not be accepted for travel at their original point of departure.

The old new dispute is forcing the two rivals into a difficult position. Failure to ease the current tensions would squeeze in an already tight situation, potentially creating a more dramatic scenario that is already in play.