-Analysis-
Everyone is talking about the post-oil era, but in all likelihood, that horizon is still far away. OPEC (the Organization of the Petroleum Exporting Countries) is very much still calling the shots in the energy sector and, consequently, in the global economy. Nothing happens in isolation on the international stage.
In April 2020, Saudi Arabia, struggling with worsening economic insecurity, suddenly opted to increase its oil production within the organization. Now, the kingdom’s long-time ally, the United Arab Emirates (UAE), is looking to do the same thing, and in the process, is openly opposing other members, including Saudi Arabia.
Up until now, Abu Dhabi and Riyadh held a strong bond, forming an untouchable strategic and political axis. In the midst of the blockade crisis, this partnership seemed all the tighter when Qatar, a sworn enemy of the Persian Gulf, chose to leave OPEC. The loss of Qatari opposition had the effect of reducing existing internal tensions within the organization.
Each member country has its own agenda and economic concerns that typically steer the enactment of new and different production rules for the years to come. In the case of the UAE, the pandemic has been very costly, forcing it, among other things, to postpone the Dubai 2020 World Expo by one year.
Qatar stands to gain from these Gulf state tensions
It is therefore all-the-more urgent for the UAE to increase its oil production both to compensate for losses incurred and to quickly increase its foreign exchange earnings. OPEC’s goal of reducing oil production until at least through 2022 is unthinkable.
By the end of 2019, the UAE had at least 100 billion barrels of oil in reserve, placing the country in eighth place globally with nearly 6% of total world reserves. It’s limited, however, by 2018 OPEC agreements stipulating that Abu Dhabi produce only 3.17 million barrels per day, even though it has the potential to produce almost 4 million.
In the past the UAE has been discreet, opting to remain in Riyadh’s shadow. Those days are over, though, and it has now become a major player in the organization. And, after several months of Abu Dhabi trying to quietly distance itself from its historical ally, the crack is for the first time taking place openly.
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Prince Mohammed bin Salman (right) receives Qatar’s Emir Sheikh Tamim bin Hamad Al Thani in Jeddah, Saudi Arabia — Photo: Balkis Press/Abaca via ZUMA Press
Could this shift within OPEC signal the possibility of a violent rift to come between Mohammed bin Salmane — the heir to the Saudi throne — and his Emirati mentor? Perhaps. Either way, what is clear is that Qatar stands to gain from these Gulf state tensions.
The pandemic is largely responsible for the expected overturning of previously long-held alliances. The geopolitical and economic context was already tense, and a year of economic collapse has only exacerbated the situation. In 2020, every member state joined together in accusing Saudi Arabia of unilaterally increasing its production capacity, subsequently causing the price of oil to fall and destabilizing other OPEC countries, namely Russia. The self-interested, lone-wolf style of behavior has not been appreciated.
Thus, the Saudi monopoly is in many areas beginning to crack, and there’s no clearer evidence of this than the UAE’s public opposition. Saudi Arabia’s historic hegemony has been severely undermined.
Still, it is in the interest of many that these tensions dissipate in order to avoid global destabilization. Under the leadership of former President Donald Trump, the United States, an ally of Saudi Arabia, had worked to resolve the crisis. But new President Joe Biden cannot be counted on to keep doing Saudi Arabia’s bidding. Since his arrival at the White House in January, the Democrat has stated he wants to assess the relationship between the United States and this ally, and in particular with Mohammed ben Salmane.
Meanwhile, like Qatar, the UAE is also threatening to leave OPEC altogether if its demands are not met. Oil is only one of the things that bind Qatar and the UAE together. Other areas include the terrorist threat in the Middle East, their common opposition to Turkey, with its expansionist aims, and above all the common interest in normalizing relations with Israel. The UAE’s threat may soon be realized. If so, the repercussions will be felt all over.
*Sébastien Boussois is a researcher and professor of international relations.
