Saudis and Emiratis fighting over OPEC oil production quotas
Amid a flare-up of OPEC tensions last week, much ink has been spilled on the supposedly fractious nature of the Saudi-Emirati relationship. We have heard prophecies of a breakdown in the longstanding alliance over the disagreement on oil production quotas. These predictions of demise are considerably premature and overlook the considerable range of issues these two countries have and continue to align on. It will take far more than a minor dispute over oil to shatter decades of friendship.
OPEC is an organization that has seen more than its fair share of arguments over the years. Barely a meeting goes by without reports of at least one member taking issue with another. When the press sensationalizes these flare-ups, it is often forgotten that the entire point of the organization is for differences to be aired and disagreements to be addressed in a structured manner. If OPEC simply folded and alliances folded every time delegates round the table failed to see eye to eye, it would not have lasted a week. Those playing up this latest dispute as triggering a major break in Gulf relations will more than likely be disappointed.
The dispute in question centers on oil production quotas, which has rumbled on since Saudi Arabia and Russia, the organization's two biggest producers, agreed in June last year to a deal that would limit output. The UAE, along with others, were reluctant adherents to the deal, given the agreed baselines failed to reflect the advances made in their production capabilities. The latest flare-up was played out more visibly than might otherwise have been expected.
However, to look into the tea leaves and see a more permanent fracture emerging is misguided. These are two countries who have been and continue to be united on the major political issues facing the region today. Concerns around Iran's funding of terror, countering extremism, and boosting economic diversification in this oil-dependent corner of the world are just some of the major topics these countries remain in firm lockstep on. Those are more than enough of a basis for a strong partnership to endure.
It is characteristic of any occasion where disagreements within a multilateral institution arise that speculation of its demise becomes rife. The U.N. Security Council has faced numerous supposed prophecies of its downfall, without there ever being a realistic prospect of that being the case. The same is very much the case here and, in fact, highlights the entire purpose of these organizations in the first place.
The very nature of cooperation on oil production means that technical disagreements and disputes are inherent in any plan of action. It's tempting for some to think of the Gulf-based oil-producing members as one homogeneous block with similar goals, ambitions, and production capabilities. However, this simply isn't the case. The Saudis, for example, have considerably larger production capabilities than their neighbors. This means that it will have a greater advantage if demand for oil begins to decline as renewables take off in earnest.
This highlights how this flare-up, despite the will of some commentators to see it as a hotly disputed disagreement between two close allies, is in fact centered on technical differences. Imagine if other global alliances, such as the U.S. and Canada or Australia and New Zealand, were to fracture over technicalities around wheat exports or cattle ranching. It simply does not reflect the reality of alliance-building and international relations.
Prophets predicting the decline of the Saudi-Emirati alliance would do well to heed this. This is a relationship based on shared security and diplomatic and cultural interests spanning decades. It is not going to be undone by one heated OPEC session. I suspect that those out there talking up the possibility of a fracture know this but are simply keen to stoke up political drama where there is little to be had. It will take considerably more than a technical disagreement over oil quotes to break one the Middle East's most enduring partnerships.
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