- Samir Hashmi
- Middle East Business Correspondent
The sharp split in oil production allocations this week between the United Arab Emirates and Saudi Arabia has left talks between the world’s largest oil-producing countries sluggish, leaving energy markets sluggish and raising oil prices for a maximum of six years.
23 countries of OPEC +, which includes the group Organization of Petroleum Exporting Countries and related manufacturers such as Russia, They had to postpone their talks indefinitely.
This decision raised fears about the stability of a group Has been effectively managing products for the past 18 months to deal with the global economic crisis related to the corona virus.
When did the issue start last week United Arab Emirates In rejected the proposal of the OPEC leaders Saudi Arabia and Russia Extend production restrictions for another eight months.
The United Arab Emirates wanted to reconsider its current tax (the level at which production cuts or increases are calculated) to allow for greater oil extraction. However, Saudi Arabia and Russia opposed doing so.
The talks took a regular turn when the energy ministers of close allies the United Arab Emirates and Saudi Arabia made their differences public.
“The split was surprising, but fighting is inevitable,” says Ben Cahill, a senior colleague at the Center for Strategic and International Studies in Washington.
“Abu Dhabi’s production capacity is not in line with its OPEC quota. It has invested a lot of money to increase its output. Demand is growing now. That is why last year the Emirates were frustrated with its inability to produce,” he says.
For many years, The Relationship Formed the geopolitics of the Arab world between Saudi Arabia and the United Arab Emirates.
Personal bond between Saudi Crown Prince, Mohammed bin Salman, And Crown Prince Mohammed bin Saeed of Abu Dhabi has been instrumental in strengthening this alliance.
Both are seen as true rulers of their country and have ambitious visions.
For many years there was deep cooperation in strategic matters. They formed an Arab military alliance in 2015 to fight the Houthi rebel movement, which has joined Iran in Yemen, and imposed travel, trade and diplomatic sanctions on Qatar in 2017.
But the rift in the relationship began to appear two years ago United Arab Emirates Rest Most of his troops were from Yemen, Leaves the Saudis with hatred.
Despite distrust of Doha, the Emirates reluctantly agreed to a Saudi-led deal to end the Qatar embargo in January.
Similarly, Saudi Arabia is not excited about the UAE’s decision to normalize relations with Israel last year.
The rift began to deepen in Saudi Arabia in February Issued a final warning to multinationals to relocate their regional headquarters to the Kingdom by 2024 or they could lose government contracts.
It was considered an indirect attack on Dubai (in the United Arab Emirates), the region’s commercial hub.
After Emirates blocked the proposed OPEC deal, the Saudis appeared to retaliate. Parking planes a United Arab Emirates.
They raised concerns about variations in the corona virus, but the decision was made shortly before an Islamic holiday, with many heading to Dubai to retire.
Saudi Arabia also announced it Exclude imports from Israel-affiliated or free zones from the Priority Tariff Agreement with other Gulf States, Which will give a blow to the economy of the UAE, which revolves around a free zone model.
The struggle at OPEC + is underscored by growing economic competition, with both countries seeking to diversify their economies by reducing their dependence on hydrocarbon exports.
With Saudi Arabia under Mohammed bin Salman pursuing a more aggressive economic strategy, the country is now competing in such sectors. Travel, Financial services and technology
“Saudi Arabia is now the largest country in the region, and to some extent it is of concern to the Emirates,” said Neil Gulliam, co-member of Saddam House in London.
“In 15 to 20 years, if Saudi Arabia becomes a dynamic economy, it will pose a threat to the Emirati economic model.”
It is not yet clear whether Saudi Arabia and the United Arab Emirates will reach a new agreement with OPEC +.
Ali Shihabi, a Saudi analyst close to the state court, did not believe it The split is blocking your relationship For a long time, Emirates’ tough stance came as a “surprise” to the Saudis, especially since they worked so hard to reach a consensus.
“Both sides have had huge disagreements in the past,” he says.
“All relations, including the United States and the United Kingdom, are going through ups and downs. But the fundamentals of this relationship are too strong to cause permanent damage to this alliance.”
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