Saudi-UAE Relations Deteriorate, Business World Prepares for Worst-Case Scenarios

The deteriorating relationship between Saudi Arabia and the United Arab Emirates (UAE) is beginning to trigger concern among international business circles. Several investment banks, law firms, and multinational companies are reportedly preparing contingency plans amid heightened geopolitical risks feared to disrupt investment, trade, and financial transactions in the Gulf region.

A Bloomberg report published on Monday (14/7) highlighted the issue under the headline ‘Wall Street Can’t Ignore the $3 Trillion Saudi-UAE Rift’, noting that the worsening ties between Riyadh and Abu Dhabi are no longer seen as merely a diplomatic matter but have become a serious concern for global market players and financial institutions.

The report stated that the divergence of interests between Riyadh and Abu Dhabi has now expanded from geopolitical issues into the economic and investment sectors. Tensions escalated following a joint US-Israeli aggression against Iran, which was met with a retaliatory strike by Tehran on American military bases in the region.

This development has drawn Wall Street’s attention because Saudi Arabia and the UAE manage sovereign wealth funds worth approximately $3 trillion, which have long been among the world’s largest sources of investment. At the same time, Saudi Arabia continues to push for Riyadh to become a regional business hub, while the UAE is expanding oil production after leaving OPEC last May.

Bloomberg assessed that if tensions continue to rise, the impact could resemble the 2017 Gulf diplomatic crisis when Saudi Arabia, the UAE, Bahrain, and Egypt severed ties with Qatar. Although the context is different, a new rift in the region is considered to have the potential to affect the stability of trade, investment, and global financial markets.