A moment of calm at Dubai's Creek Port earlier this month. The United Arab Emirates has been hit hard by Iran and has privately urged Gulf states to retaliate.
The United Arab Emirates' exit from OPEC next month is a blow to Saudi Arabia and a potential bid for US President Donald Trump, and the latest sign that the war on Iran is exacerbating old tensions in the Persian Gulf rather than uniting the region.
The United Arab Emirates (UAE)'s exit from the Organization of the Petroleum Exporting Countries (OPEC) is the culmination of a long-running dispute with Saudi Arabia over the amount of oil its members are allowed to pump.
Until recently, Riyadh had wanted to restrict supply to support prices, while the UAE preferred to free up production.
“The UAE has always been on the side of a volume strategy, and the Saudis have been on the side of a price strategy,” Arne Lohmann Rasmussen, principal analyst and head of research at Global Risk Management, told Middle East Eye.
"The United Arab Emirates is the OPEC country with the largest amount of spare capacity compared to production," Rasmussen said.
"The political differences between the UAE and Saudi Arabia have been there for a long time, but Saudi Arabia is back to regaining market share, and the war has actually made their old argument less relevant. This exit is much more political," Greg Priddy, senior fellow for the Middle East at the Center for the National Interest, told MEE.
The departure of OPEC's third-largest producer comes as Abu Dhabi lobbies the US to continue its war on Iran and is reaching out to Israel.
Axios reported this week that Israel sent an "Iron Dome" air defense system and technicians to the United Arab Emirates when the small Gulf state was attacked by Iranian drones and missiles.
The Gulf states are home to thousands of US troops and have close ties to US weapons systems. The region has generally rallied behind the US despite frustration that its pleas not to attack Iran have been ignored.
Saudi Arabia has helped the US wage war against Iran by providing improved access to bases and airstrikes, but has also supported the mediation efforts of its close partner, Pakistan.
In contrast, the UAE has lobbied publicly and privately for the US to continue attacking Iran and has tried to prevent Pakistan from joining the US and Iran for talks.
MEE previously reported that UAE Foreign Minister Sheikh Abdullah bin Zayed told US Secretary of State Marco Rubio that Abu Dhabi was prepared for the war to last up to nine months.
Rivalry with Saudi Arabia
The UAE's decision to leave OPEC is part of a broader rivalry with Saudi Arabia, analysts say. The Saudis dominate the group and a looser cartel that includes Russia, known as OPEC+.
“This will anger the Saudis,” a Western diplomat in the region told MEE. “It seems the UAE has something bigger in mind.”
Saudi Arabia is the largest country in the region and, like the UAE, has ambitions to project power abroad. In fact, Saudi Arabia attacked UAE allies in Yemen shortly before the outbreak of war with Iran. Both countries support opposing sides in Sudan's civil war.
Iran's attacks in the Gulf have sparked speculation that the war will bring the two former regional allies closer together, but as the conflict drags on, Abu Dhabi and Riyadh appear to be accelerating their competition.
For example, MEE has revealed that arms shipments from Pakistan, paid for by Saudi Arabia, began arriving in eastern Libya in March for Khalifa Haftar, whose army Riyadh is trying to oust from the United Arab Emirates.
"The UAE has a fundamentally different view of energy production than Saudi Arabia, and that means they no longer need to listen to the Saudis, who are setting the terms in OPEC," Bernard Haykel, a professor of Near Eastern studies at Princeton University, told MEE, adding that the UAE had been considering leaving OPEC for years.
"They finally did, probably because of the war. Everything is up in the air and there is an opportunity to make dramatic decisions," Haykel added.
“In practical terms, the Emirates have very significant spare capacity. If they want to play the role of market regulator like the Saudis did, they can do that. That empowers them a lot.”
Energy analysts agree that this move is timely.
Competing Iranian and American blockades of the Strait of Hormuz mean that energy flows through the Gulf have almost completely stopped.
The United Arab Emirates, which before the war exported about 3.5 million barrels of oil per day (bpd), now ships about 1.9 million barrels of oil per day through a pipeline that ends at the port of Fujairah, bypassing the Strait of Hormuz.
Theoretically, the United Arab Emirates has about one million barrels per day of reserve capacity.
“If the UAE had left OPEC before the war, it would have been a big problem,” said Priddy of the Center for the National Interest. “But no additional capacity will come to market now because of the war. Even if the war ends, there will be enough gaps in global inventory levels to absorb their higher exports,” he added.
But in the long run, experts say, the UAE will mark the death of a 65-year-old energy alliance that was launched by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
“This is a big blow to OPEC,” Rasmussen said. “We could be writing its obituary.”