The United Arab Emirates (UAE) announced on April 28 that it will leave the global oil producers’ cartel Opec. Its decision is the latest sign that the war in the Middle East has not only deepened animosities between Iran and its Gulf neighbours, but among the Gulf states too.
Founded in 1960, Opec is a rare success story among multilateral organisations in the region. Its policies paved the way for Gulf oil producers to have enough funds to buy back or renationalise their oil resources, and finance the spectacular development of their states.
The organisation has survived all major revolutions and wars in the region thus far – though Qatar left in 2019 when it was blockaded by its Gulf neighbours.
Saudi Arabia, the largest oil producer in Opec, holds substantial leverage within the group. This has led to tension with the UAE, which has for some time pushed for higher production quotas for itself, given its spare capacity. These efforts have been to no avail.
However, its decision to leave Opec is about more than merely frustration with the organisation.
Though it was very close to Saudi Arabia in the mid-2010s, the UAE has in recent years drifted apart from its larger neighbour. This has been driven by a number of regional issues including the countries’ diverging strategies in wars in Yemen and Sudan, and their respective relations with Israel.
The UAE normalised relations with Israel in 2020, while the Saudis say they will only normalise once a Palestinian state is established.
The two countries have also recently become serious economic competitors. And although both states have been hit hard by Iran in the current war, the conflict seems to have accelerated their rivalry.
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Saudi Arabia is the largest and richest country in the Gulf. But many of its transformative economic projects require political stability and a high oil price to succeed. The war has exposed the limits of its policy of tentative outreach to Iran, and of its partnership with a US that is so closely allied with Israel. So, the Saudis have strengthened defence ties with nuclear-armed Pakistan.
These deepening ties have been met with dismay in the UAE, which has close ties to India. The Emiratis have been critical of Pakistan during the war, calling on Islamabad to condemn the Iranians more forcefully – something that is not possible due to Pakistan’s role as a mediator in peace negotiations.
At least partly in frustration at its response to the war, the UAE recently demanded that Pakistan repay a US$3.5 billion (£2.6 billion) loan. Saudi Arabia immediately came to the rescue by providing Pakistan with financial support.
The UAE’s announcement to leave Opec coincided with a meeting of the Gulf Cooperation Council in the Saudi Arabian capital Riyadh, where members sought to find common ground on the Iran war. This was a major affront to the Saudis.
Other Gulf frictions
The war has sparked other frictions in the Gulf, including reviving old tensions between the UAE and Iran over three islands – Abu Musa, Greater Tunb and Lesser Tunb – that Iran occupied at the time of Emirati independence from Britain in 1971. These islands strengthen Iran’s strategic position along Gulf shipping lanes.
The UAE has long claimed sovereignty over the islands, while Iran claims they were always part of its territory. Iran’s control of the three islands is thought to be part of a secret deal between Britain and the Shah of Iran around 1970, whereby the shah would renounce a claim Iran maintained to Bahrain in return for the islands.
This and other historic border disputes in the region, including between the UAE, Saudi Arabia and Oman, remain some of the most sensitive topics in modern Gulf history. For a forthcoming book on the rise of the Gulf states, I have tried to access relevant UK Foreign Office documents, but have had numerous freedom-of-information requests denied on closed material dating back to the 1960s and earlier.
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The northern Gulf state of Kuwait has also been hit hard during the conflict. Here, many attacks seem to have come from Shia militias based in Iraq. These attacks have revived traumatic memories of Iran-linked political violence in the 1980s, and Iraq’s invasion in 1990.
States that cannot bypass the closed Strait of Hormuz – such as Bahrain, Kuwait and Qatar – have experienced the most economic damage from the war. To balance its budget, Bahrain is already dependent on aid by wealthier Gulf states. The UAE, Saudi Arabia and Oman, on the other hand, have the geographical means to bypass Hormuz.
Oman, which controls one side of the strait, may well benefit in the long run. This could either be through a new arrangement with Iran to charge vessels a toll, or because its ports on the Arabian Sea will increase in significance – perhaps even resurrecting some of Oman’s former glory, when it was a major regional power. This is not something neighbouring UAE and Saudi Arabia would like to see.
The reckless US-Israeli attack on Iran has thus opened up old faultlines, and could create new ones between states around the Gulf. It is also undermining the few avenues of regional cooperation that remain. This makes a fragmented and dangerous region even more so.
