Feud in the Gulf

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In a region where rulers refer to each other as "brothers," it's perhaps not surprising that disagreements can tip into acrimonious disputes. But when the standoff rattles world oil markets, like the one now between the United Arab Emirates and Saudi Arabia at OPEC+, it takes on a whole new dimension. The heart of the problem is the UAE's opposition to a Saudi-led production deal that would extend quota limits. Abu Dhabi wants to re-negotiate the level from which its output is calculated so it can pump more crude. It has spent heavily on boosting capacity and strengthening ties with energy-hungry Asian markets. How the issue plays out at OPEC+ is significant for energy supplies as major economies emerge from Covid-19 lockdowns. But the effects of the UAE-Saudi divergence also has political repercussions from Yemen to Israel, Iran to Qatar and even Turkey. Global firms too may be pushed into taking sides. The dynamic between Abu Dhabi's crown prince, Sheikh Mohammed bin Zayed, and his Saudi counterpart, Crown Prince Mohammed bin Salman, has been central to Middle East events in recent years. Together they intervened in Yemen, the scene of the world's worst humanitarian disaster, but the UAE's withdrawal in 2019 left a Saudi-led coalition to battle it out with Iran-backed fighters that have targeted the kingdom. Abu Dhabi increasingly has asserted an independent foreign policy and focused on forging ties with old foes like Israel and on economic recovery at home. Saudi Arabia took aim at Dubai as the Middle East's business and tourism capital with an ultimatum for international companies to move their regional headquarters to Riyadh. As they brace for a post-oil economy, their competition is only expected to grow. — Sylvia Westall Crown Prince Mohammed bin Salman, left, and Sheikh Mohammed bin Zayed. Source: Anadolu Agency/Getty Images Click here to follow Bloomberg Politics on Twitter and tell us how we're doing or what we're missing at balancepower@bloomberg.net.

Global Headlines

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