PNN – Informed sources report that Saudi Arabia has begun punitive measures against the United Arab Emirates following Abu Dhabi’s withdrawal from the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ coalition.
According to the report of Pakistan News Network; informed sources report that Saudi Arabia has begun punitive measures against the United Arab Emirates following Abu Dhabi’s withdrawal from the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ coalition.
According to the report, Saudi Arabia, which holds the main lever of influence in OPEC, considers the UAE’s withdrawal as a “foolish act and a game of regional grand politics,” and its next steps are considered “more severe.”
Analysts predict that Riyadh, using its power as OPEC’s largest producer, will likely impose a heavy cost on the UAE by increasing production and flooding the oil market.
Preliminary agreement in OPEC+ with Saudi leadership
In a development related to these tensions, OPEC+ in its latest decision agreed to increase oil production by 411,000 barrels per day in June 2025. The increase, which will be carried out in three monthly stages, is mainly led by Saudi Arabia and is accompanied by Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman.
The new plan sets the UAE’s production quota at 3.092 million barrels per day, while Saudi Arabia increased its production by 170,000 barrels in May, bringing its share to 9.367 million barrels per day.
A look back at the history of disputes: from Yemen to oil quotas this new confrontation has its roots in years of growing tension and competition between the two main powers on the Arabian Peninsula.
The oil dispute between Riyadh and Abu Dhabi first came to light in 2021 during the COVID-19 pandemic, when the UAE opposed Saudi Arabia’s plan to extend production cuts, effectively standing up to its “big brother.”
However, the two countries’ confrontation is not limited to oil policies. International analyses suggest a “structural gap” in the balance of power in the Gulf.
According to Reuters, the UAE’s recent decision to withdraw from OPEC is not just a simple disagreement over production quotas, but the result of years of deep disagreements over the wars in Yemen, Sudan and the prospects for leadership in the region.
Technical Details; Oil Budgets and Export Policy
The crux of these economic differences is the difference in the two countries’ break-even prices. Energy analysis shows that the UAE, with a budget that breaks even at around $50 per barrel, tends to lower prices to capture more market share.
In contrast, Saudi Arabia needs a price of around $90 per barrel to cover the huge costs of projects like NEOM and other transformative programs. This strategic gap has led Abu Dhabi to adopt a policy of “oil independence.” The UAE, investing $62 billion in increasing its production capacity, plans to easily increase its production to more than 3.4 million barrels per day after it breaks OPEC quotas. This surplus production, combined with Saudi Arabia’s spare capacity, has the potential to shock global markets if tensions escalate.
The outlook: supply shock or price war?
With the UAE’s withdrawal from OPEC confirmed (effective May 1), OPEC’s “deterrence” has been severely weakened. Market observers believe that if Saudi Arabia carries out its “oil flood threat,” the world will enter a new phase of price war, not unlike the price collapse in 2020 (during the coronavirus outbreak). In that case, in addition to the UAE, other high-cost producers will also be the main losers.