Home Oil & Gas Growing competition in the Gulf fueling clash at OPEC

Growing competition in the Gulf fueling clash at OPEC


The fighting between the United Arab Emirates and Saudi Arabia that emerged in recent days over oil production had been brewing for months, if not years.

A seven-member federation of states on the Persian Gulf, the Emirates is pursuing ambitious plans to expand and modernize its economy, including billions spent on its energy industry. Eventually these aspirations were bound to bump up against those of its powerful neighbor, Saudi Arabia, as both countries try to position themselves for changes in energy production and other areas of their economies in the coming years.

The tensions, which normally might be resolved in a phone call from one royal palace to another, came to a head at meetings of the oil producers’ group known as OPEC Plus. Officials failed to reach an agreement on raising production on Thursday, and again on Friday, and then on Monday a scheduled meeting was canceled.

The chief roadblock: The United Arab Emirates insisted on raising its output limits. The Saudis resisted, and on Tuesday the lack of a deal sent oil prices gyrating.

The dispute may signal a fundamental realignment of the nations in the gulf. The Emirates’ ambitions for a more diverse economy, seeded with Western investment, are prompting it to step more forcefully outside Saudi Arabia’s shadow.

“It’s a more competitive landscape across the gulf on a range of economic issues,” said Karen Young, a senior fellow at the Middle East Institute, a research organization in Washington.

Led by Dubai with its collection of futuristic skyscrapers and alluring shopping malls, the Emirates has made itself into a business, financial and tourism hub, although the pandemic has clearly been a setback.

The real power in the Emirates, though, lies with Abu Dhabi, which produces the oil that bankrolls the place. Abu Dhabi has 98 billion barrels of reserves, about 6 percent of the world total.



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