Saudi vs UAE: How Yemen, oil and rivalry are straining a Gulf friendship

After Riyadh bombed an alleged Emirati arms shipment in Yemen in a rare public clash, long-simmering Saudi-UAE tensions over security, oil policy and economic competition have come into the open

The arrival of two ships from the United Arab Emirates (UAE) in Yemen has escalated into tensions between Abu Dhabi and Saudi Arabia, two of West Asia’s most influential powers. Soon after the vessels docked at Yemen’s southern port of Mukalla, Riyadh launched airstrikes on the port on Tuesday (December 30), accusing the ships of unloading weapons and armoured vehicles meant for the UAE-backed Southern Transitional Council (STC), a separatist group seeking self-rule in southern Yemen. 

 

Saudi officials added that the ships had originated from the UAE’s port of Fujairah. Shortly afterwards, the UAE announced it would withdraw its remaining forces from Yemen, calling the strike unjustified and denying that the cargo contained weapons. Public friction of this nature between Riyadh and Abu Dhabi is rare, given their long-standing partnership in regional affairs.

 

 

Why this incident matters 

This confrontation is not confined to Yemen’s battlefields. It has become a flashpoint highlighting growing differences between Saudi Arabia and the UAE over Yemen’s political future, oil production and OPEC+ coordination, as well as competing economic ambitions and models of regional leadership.

 

How Saudi Arabia and the UAE became close allies 

The partnership between Saudi Arabia and the UAE has evolved from early disputes into a close strategic alignment. Relations began with tensions, including the Buraimi dispute of the 1950s, when Riyadh challenged Abu Dhabi’s territorial claims, leading to armed clashes. Even after the UAE gained independence in 1971, Saudi Arabia withheld recognition over border disagreements and oil fields. These disputes were resolved in 1974 with the Treaty of Jeddah, which delineated borders and granted Saudi Arabia access to territories including the Shaybah oil field.

 

Despite residual tensions, ties strengthened significantly in the early 2010s. As the Arab Spring spread, Riyadh and Abu Dhabi aligned against Islamist movements, deploying joint forces in Bahrain to quell unrest and backing Egypt’s 2013 military coup against President Mohamed Morsi. Both states viewed the Muslim Brotherhood’s rise as a threat to their political systems, coordinating financial and political support for Egypt’s new leadership while cracking down on affiliated groups domestically.

 

Their partnership deepened further in 2015 with the formation of a coalition against the Houthis in Yemen, framed as a response to Iranian influence. The UAE focused on ground operations while Saudi Arabia led airstrikes, marking their most ambitious joint military intervention.

 

Two years later, the self-styled ‘Gulf brothers’ jointly led the boycott of Qatar in 2017, reinforcing their image as guardians of Gulf Cooperation Council stability. 

 

Who Saudi Arabia and the UAE are and why they matter 

Saudi Arabia is the largest economy in the Arab world, a leading oil exporter and the custodian of Islam’s holiest sites. The International Monetary Fund projects its nominal gross domestic product to exceed $1.25 trillion in 2025, with crude output remaining among the world’s highest at around ten million barrels per day, alongside growing non-oil sectors.

 

The UAE, by contrast, is projected to record a nominal GDP of roughly $536–550 billion in 2025, driven largely by non-oil growth. Dubai has emerged as a global hub for finance, trade and aviation, while Abu Dhabi anchors energy production and sovereign wealth.

 

Together, the two countries control around 24 per cent of global oil reserves and exert significant influence over energy markets, investment flows and regional security.

 

Yemen: Where their interests began to diverge 

Yemen has become the most visible arena of divergence. Saudi Arabia’s priority has been securing its borders and supporting a unified Yemeni state aligned with Riyadh. The UAE, however, has backed the Southern Transitional Council, which seeks autonomy for southern Yemen and was formed in 2017 after protests in Aden.

 

Saudi officials have accused Abu Dhabi of encouraging STC operations near its borders, calling such actions a threat to national security. “The Kingdom stresses that any threat to its national security is a red line,” the Saudi foreign ministry said on Tuesday, adding that it would not “hesitate to act”.

 

Oil and OPEC+: Different economic priorities 

Differences have also surfaced within OPEC+. In 2021, the UAE rejected Saudi-backed extensions of production cuts, arguing that quota rules unfairly limited its expanded capacity. The dispute nearly derailed talks before a compromise raised the UAE’s baseline production to 3.65 million barrels per day.

 

While Saudi Arabia has favoured coordinated output cuts to stabilise prices, the UAE has pushed for higher quotas to maximise returns on its investments in capacity.

 

Riyadh vs Dubai: Competing visions of a business hub 

Economic rivalry has intensified as Saudi Arabia seeks to challenge Dubai’s dominance as the Gulf’s primary business hub. Under Vision 2030, Riyadh has introduced incentives to attract multinational headquarters, including tax breaks and mandates linked to government contracts.

 

Dubai, however, remains a global centre for finance, logistics and tourism, benefiting from business-friendly regulations, deep liquidity and long-established infrastructure. The competition has shifted from cooperation to structural rivalry over regional economic leadership.

 

Different models, different styles of power 

Saudi Arabia’s development model is highly centralised, driven by Crown Prince Mohammed bin Salman through state-led megaprojects. The UAE’s federal structure, by contrast, allows individual emirates greater autonomy, enabling Dubai to focus on trade and finance while Abu Dhabi leads on energy and sovereign investments.

 

Why this rivalry matters beyond the Gulf 

Saudi–UAE tensions have implications beyond the region. Disagreements within OPEC+ can influence global oil prices and inflation, while instability in Yemen threatens shipping through the Bab al-Mandab Strait, a critical global trade route. For multinational firms, shifting economic dynamics will shape decisions on regional headquarters and investment.

 

Although there is no formal break in relations, the episode suggests the era of seamless Saudi–UAE alignment is fading. The relationship is increasingly likely to be competitive and transactional, shaped by issue-specific cooperation rather than enduring strategic unity.