The Great Gulf Gamble

The UAE's OPEC withdrawal reflects a game changing breakdown in regional security. The nature of risk in the GCC is dramatically shifting.

Commercial topics: If you are investing in the Gulf, you are ignoring the very real possibility that nations that currently exist will no longer exist in their current borders in coming years.

For the UAE to choose to withdraw from OPEC and OPEC+ right after Iran demonstrated its capabilities is quite a bold move. We believe that is opens up unforeseen scenarios, which are behind the paywall below. We note that this decision comes after the UAE chose to withdraw its USD3.5 billion deposit from Pakistan, due to Pakistan’s efforts to mediate the US-Iran conflict. This itself was highly unusual, as Turkey, Saudi Arabia, Egypt, and Pakistan are increasingly coordinating their positions against both Iran and Israel, placing the UAE in open opposition to this emerging Islamic consensus and to Saudi Arabia and Iran in particular.

Most of the region’s great survivors - Oman, Lebanon’s Walid Jumblatt, Syria’s Hafez al-Assad, Iraq’s Nouri al-Maliki and Masoud Barzani, and even the Hashemite monarchy in Jordan - never do this. Rather, their politics rely on a mix of balance and appeasement intended to avoid conflict, and to ensure that if conflict is imposed, there is a wide set of allies to help manage it.

The Revolt of the Muslim World

Ed note: We know that our subscription is expensive. But we did predict the Iran-America War even before the 7 October attacks, the Saudi-Iranian reconciliation of 2023, and the Russia-Ukraine war. If you have business in the Middle East or the Islamic world, you need our services. We are typically several years ahead of the curve, even if we don’t get everything right. Subscribing to us saves you from many bad bets. This is one of those pieces that in five years you may wish you had read.

Drivers of the UAE’s Decision