SAUDI ARABIA AND THE UAE BEYOND OPEC: A RACE FOR DIVERSIFICATION

Luglio 22, 2021

SAUDI ARABIA AND THE UAE BEYOND OPEC: A RACE FOR DIVERSIFICATION

The MED This Week newsletter provides expert analysis and informed insights on the most significant developments in the MENA region, bringing together unique opinions on the topic and reliable foresight on future scenarios. Today, we focus on the Saudi-Emirates relationship, as Riyadh’s and Abu Dhabi’s recent disagreements within the OPEC Plus cartel may indicate a possible fault line in one of the region’s most long-lasting alliances.

On the 19^thof July, OPEC Plus cartel nations agreed to boost their oil production to reduce oil prices and stabilize the global market. The final goal was to restore their pre-pandemic oil output by September 2022, which was cut by about 10 million barrels per day last year due to worldwide restrictions and the disruption of economic activities. The decision came after weeks of confrontation within OPEC Plus, which saw Saudi Arabia and the United Arab Emirates (UAE) in an unusual dispute. It is not the first time the two allies show divergences, giving airtime to rumours about the solidity of the traditional Riyadh-Abu Dhabi axis. In fact, oil production is not the only bone of contention between the two allies: the war in Yemen and their economic competition are also causing friction. As regards Yemen, Riyadh and Abu Dhabi’s respective support for different factions undermines the Riyadh Agreement, which were an attempt to unify the southern factions under one government. Meanwhile, on the economic front, an-intra Gulf rivalry may be a likely scenario as Saudi Arabia and the UAE, as well as the other gulf economies, are dealing with structural reforms aimed at economic diversification to reduce their reliance upon oil exports. These plans are pushing the two countries to compete in several strategic fields, such as the airline industry, which could further complicate the cohesion among the Gulf Cooperation Council (GCC) with important implications for the region.

Experts from the ISPI MED network react to Riyadh’s and Abu Dhabi’s recent disagreements within the OPEC Plus cartel.