How will UAE bolting OPEC impact trade relations with Saudi Arabia?

How likely is the Saudi-UAE row to hit trade?

Saudi Arabia and the UAE are so deeply enmeshed in trade, investment and logistics that analysts say a full-blown economic rift is unlikely and would serve neither’s self-interest. The region is already reeling from the fallout of the Iran conflict and its impact on investor and business sentiment.

The last thing Gulf Cooperation Council nations need is more disputes and disruptions to the smooth conduct of business in the region, said Fareed Mohamedi, managing director at SIA-Energy International.

Still, trade links in the region have been reshaped before. In June 2017, Saudi Arabia, the UAE, Bahrain and Egypt severed ties with Qatar almost overnight over a range of allegations, including fomenting regional unrest that Doha denied.

The Qatar blockade targeted a smaller economy with fewer interdependencies. Qatar, a much smaller oil producer, left OPEC in 2019. The UAE, which has a capacity of around five million barrels a day, and a large excess capacity, has the ability to significantly disrupt oil markets.