UAE at risk from Yemen after Saudi - Iran deal
Iran – Saudi agreement paves the way for attacks against the UAE’s Yemeni allies as well as the UAE itself, and perhaps for a broader UAE - Saudi breakdown in relations.
Commercial Takeaway: The Ansar Allah (Houthi) Movement are likely to strike UAE allies and the UAE itself, rather than Saudi Arabia and its allies, as they attempt to seize control over hydrocarbons infrastructure. The Houthis aim to resume Yemeni oil production and exports. Houthi missile and drone strikes against Yemeni islands controlled by the UAE are also likely, carrying a small risk of collateral damage to shipping. Saudi - UAE relations are increasingly likely to deteriorate.
Analysis:
The Ansar Allah (Houthi) Movement have launched an attack in Harib District, Ma’rib Governorate. They likely aim at taking control of oil and gas production facilities nearby, in Safir. They are engaged in combat with UAE-backed forces. This latest attack began days after Iran and Saudi Arabia reached an agreement to restore diplomatic relations in Beijing.
Any force that wishes to consolidate its control over Yemen needs to gain control over critical oil and gas revenues. Currently, oil and gas production and export facilities are controlled by allies of the UAE. They are unlikely to accept the Iran – Saudi reconciliation proceeding at their expense.
These UAE-aligned forces can prevent the resumption of Yemeni oil and gas production. The Houthi offensive is aimed at breaking their hold over energy infrastructure. As such, if successful, the offensive is likely to continue to Balhaf and Dabba, where Yemen’s hydrocarbon export terminals are located.
UAE-aligned and Saudi-aligned factions had already been deeply divided. The withdrawal of Saudi Arabia from direct involvement in the Yemeni conflict is likely to deepen this divide. Saudi-backed forces will likely remain neutral and refrain from backing UAE-backed forces, or even join the Houthi in attacking UAE-backed forces in a localised fashion.
Mistrust between the UAE and Saudi Arabia has grown. Although nominally allies, it is Saudi Arabia that has borne the brunt of attacks from Yemen. The UAE has also gained control over key Yemeni islands, including Socotra. In doing so, the UAE has been able to deny these islands to Iran, but also to Saudi Arabia. The UAE has thus ensured that it plays a major role in partnership with Western powers in securing global maritime trade routes, which Saudi Arabia perceives as occurring at its expense.