The latest flare-up between Saudi Arabia and the United Arab Emirates over Yemen looks dramatic on the surface, but OPEC cohesion, not missiles or militias, is what ultimately matters to the oil markets, which is why the latest public spat between Saudi Arabia and the UAE over Yemen created just a temporary blip in crude prices.
Saudi forces intercepted this week what they said was an unauthorized UAE-linked shipment of weapons and military equipment destined for southern Yemen. The Saudi-led coalition dished out an airstrike on the southern Yemeni port of Mukalla after Riyadh framed it as a security breach. Abu Dhabi claimed that the equipment was intended for its own counterterrorism forces and denied that it was arming separatist groups.
In the end, the UAE said it would pull out its remaining forces out of Yemen, according to Reuters.
It is messy, public, and awkward — especially given that Saudi Arabia and the UAE sit at the core of OPEC’s decision-making. Yet for oil markets, the immediate impact is close to zero. And that is precisely because OPEC is not a club held together by shared values, shared foreign policy, or shared views on Yemen
OPEC works because its members can disagree (even loudly) on politics while still coordinating production plans.
We have seen this before, although perhaps not on this scale. Saudi-Emirati tensions over Yemen are not new. Both countries entered the conflict together in 2015, then gradually diverged as their interests in southern Yemen split. Riyadh prioritizes territorial unity and border security. Abu Dhabi has backed southern factions it sees as better aligned with its maritime and security goals. Those differences have simmered for years, and yet they haven’t blown up OPEC policy.
There is precedent to draw on for the oil market. In 2021, the UAE openly threatened to block an OPEC+ deal over production baselines, arguing that its rapidly expanding capacity was being unfairly constrained. A compromise eventually resolved the dispute, but exposed OPEC’s real sticking point: capacity growth versus quota discipline.
That dynamic is far more relevant heading into 2026 than any Yemen-related spat. Next year is already looking like it will be a tense one for OPEC, with forecasts warning of oversupply and softer prices, even as OPEC itself has avoided endorsing the glut narrative. But managing production targets in that environment will require cohesion—harmony over Yemen is not required.
Saudi Arabia’s challenge is not that its partners occasionally clash outside the oil market. It is ensuring that those clashes do not bleed into production policy when restraint matters most. Yemen noise may test diplomatic bandwidth, but history suggests that OPEC can function perfectly well without everyone holding hands, as long as they still agree on the math.
By Julianne Geiger for Oilprice.com
Saudi Arabia’s recent agreements with the Syrian Petroleum Company to help revive and develop Syria’s long-neglected oil and gas fields are not a benevolent Gulf gesture but the latest step in a carefully sequenced post-Assad strategy shaped in Washington and London. The removal of Bashar al-Assad last December -- driven as much by Syria’s pivotal geography and Mediterranean frontage as by the desire of the new U.S. administration to demonstrate its willingness to unseat entrenched autocrats -- created a vacuum that Western planners were determined not to fill with another Iraq-style occupation. Instead, they have opted for a reconstruction model fronted by powerful Arab states, with Western firms embedded behind them. The UAE’s early lead in resuscitating Syria’s gas sector was the first signal of this shift; Riyadh’s move into that sector – and its vital oil space too -- is the second, and it aligns neatly with Washington’s broader effort to re-anchor regional influence and revive the architecture of Arab?Israeli normalisation that defined Donald Trump’s first term.
The agreements between Saudi Arabia and Syria are not the usual airy-fairy declarations of intent designed to signal political goodwill with little practical follow-through. They are operational, detailed, and being driven directly by Riyadh’s Ministry of Energy, which is overseeing four of its key companies -- TAQA, ADES Holding, Arabian Drilling, and the Arabian Geophysical and Surveying Company (ARGAS) -- as they move into Syria to provide services, technical support, and field development across both oil and gas. ARGAS will deliver 2D and 3D seismic surveying and associated technical services to support exploration and drilling, while Arabian Drilling is set to supply rigs, conduct drilling and workover operations, and provide workforce training and development, according to company releases. TAQA will handle advanced, integrated solutions for the construction and maintenance of oil and gas fields and wells, and ADES Holding will initially focus on boosting output across five gas fields -- Abu Rabah, Qamqam, North Al?Faydh, Al?Tiyas, and Zumlat al?Mahar. These moves build on the UAE’s own push into Syria’s gas sector, following Dana Gas’s preliminary agreement on 12 November with Syria’s state oil company to redevelop key fields. Together, these Gulf-led initiatives will operate alongside Western efforts, after the July announcement that U.S. firms Baker Hughes, Hunt Energy, and Argent LNG are working on a broader plan to rebuild Syria’s oil, gas, and power sectors. That plan is initially centred on areas west of the Euphrates, with expansion eastward expected as soon as conditions allow.
Related: Why China Is Driving Short-Term Oil Prices But OPEC Still Holds the Lever
Despite fourteen years of civil war, the companies now moving into Syria still have substantial potential to work with. Before hostilities erupted, the country was producing around 316 billion cubic feet per day of dry natural gas and held proven reserves of 8.5 trillion cubic feet. Russia’s Stroytransgaz had begun developing the South?Central Gas Area in 2009, and by 2011, this work had lifted Syria’s natural gas output by roughly 40%. Combined oil and gas exports accounted for a quarter of government revenues at the time, making Syria the eastern Mediterranean’s leading hydrocarbon producer. After Russia’s heavy military intervention to shore up President al-Assad, Moscow and Damascus signed the 2015 Cooperation Plan, which covered the restoration of at least 40 energy facilities -- initially gas, later offshore oil -- alongside a major build-out of the power sector, analysed in full in my latest book on the new global oil market order. This included the full reconstruction of the Aleppo thermal plant, installation of the Deir Ezzor plant, and capacity expansions at the Mharda and Tishreen facilities, all aimed at reenergising the national grid and restoring central control to Damascus. In short, from the West’s perspective, much of the groundwork for Syria’s energy revival has already been laid -- and paid for -- by Russia.
A similar story applies to Syria’s oil sector. Another component of the 2015 Cooperation Plan was the repair and capacity?boosting upgrade of the Homs refinery (the other being in Banias), with Phase 1 targeting 140,000 barrels per day (bpd), Phase 2 aiming for 240,000 bpd, and Phase 3 for 360,000 bpd. Moscow’s intention was that Homs could also refine Iranian crude routed through Iraq, with onward shipments into southern Europe. Before the civil war, Syria was producing around 400,000 bpd from proven reserves of 2.5 billion barrels; earlier still -- before recovery rates declined due to the lack of enhanced oil recovery techniques -- output had approached 600,000 bpd. Europe imported more than US$3 billion of Syrian oil annually up to 2011, much of it destined for Germany, Italy, and France via the Mediterranean export terminals at Banias, Tartus, and Latakia. A wide range of international oil companies operated in Syria at the time, including the UK’s Shell, Petrofac, and Gulfsands Petroleum; France’s then?Total; China National Petroleum Corporation; India’s ONGC; Canada’s Suncor Energy; and Russia’s Tatneft and Stroytransgaz.
As the events since 2011 have repeatedly shown, Syria was never just another Middle Eastern ally; it was the linchpin of Moscow’s entire regional strategy. It offered something Russia had coveted for decades: a warm?water military presence on the Mediterranean, outside NATO’s containment arc, and within striking distance of Europe’s southern flank. The Kremlin’s naval facility at Tartus and the airbase at Hmeimim gave Moscow permanent, hard?power reach into the Levant, the eastern Mediterranean, and North Africa -- a capability it had lacked since the collapse of the Soviet Union. Syria also provided Russia with a forward operating platform for intelligence collection through its base just outside Latakia, and for arms sales, and diplomatic leverage, all underpinned by deep involvement in the country’s energy sector. More broadly, just before al?Assad’s removal by Washington and London, Russia and Iran were finalising plans for the long?anticipated ‘Land Bridge’ -- a corridor running from Tehran to Syria’s Mediterranean coastline, designed to massively expand weapons flows into southern Lebanon and the Golan Heights for use against Israel, also detailed in my latest book on the new global oil market order. Supporting infrastructure for this route was already being laid through the US$17 billion Iraq–China Strategic Development Road, intended to run from Basra to southern Turkey and plug directly into China’s Belt and Road Initiative.
For Iran, the objective was to bind the Islamic world into what it sees as an existential struggle against the broadly Judeo-Christian democratic alliance of the West, with the U.S. at its centre. This dovetailed neatly with the Chinese and Russian push for a multi-polar world in which Washington anchors only one of three dominant spheres of influence — the others led by Beijing and Moscow. The same logic has underpinned President Xi Jinping’s increasingly assertive Middle East policy, reflected in his meetings with regional leaders in December 2022 and January 2023. The agenda was clear: finalise a China–Gulf Cooperation Council Free Trade Agreement (covering Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) and to forge a “deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat”.
Neither Washington nor London could tolerate a Russia-anchored Syria – one with rebuilt energy infrastructure, restored export capacity, and permanent military bases – that would have given Moscow a durable geopolitical foothold on NATO’s southern doorstep. The removal of al-Assad and the shift to a new Western-inspired reconstruction model is therefore not simply about rebuilding Syria; it is about dismantling the most valuable Middle Eastern asset Russia had acquired in a generation. The model being used is the one initiated by Trump in his first term – a series of ‘relationship normalisation’ deals signed between major Arab countries and the West’s leading geopolitical partner in the Middle East, Israel. The UAE had been the first major signatory to such a deal, on 13 August 2020, and has long figured in Washington’s plans as a strategic partner to counter the influence of Iran, Russia, and China, a theme also explored in my latest book on the new global oil market order. U.S. officials have also regarded Saudi Arabia as a potential participant in such arrangements, encouraged by broadly positive comments from Crown Prince Mohammed bin Salman, with the likelihood of progress increasing in the event of a leadership transition in Riyadh. Against this backdrop, the new energy agreements in Syria involving the UAE and Saudi Arabia are not a loose collection of Gulf investment initiatives but a deliberate reengineering of the country’s energy and political architecture. The UAE and Saudi Arabia supply the regional legitimacy; Western firms provide the technical and operational backbone; and Washington shapes the overarching strategic design. In the process, Russia’s years of investment, military intervention, and energy?sector entrenchment have been quietly pushed aside, replaced by a reconstruction model that restores Western influence, draws key Arab states more tightly into the U.S. orbit, and reopens the pathway to broader regional normalisation.
By Simon Watkins for Oilprice.com
