Published by Global Banking & Finance Review®
Posted on December 30, 2025
5 min readLast updated: January 20, 2026
Add as preferred source on GoogleSaudi airstrikes in Yemen expose distrust with UAE, affecting Gulf stability and oil decisions amid STC advances.
By Maha El Dahan and Samia Nakhoul
DUBAI, Dec 30 (Reuters) - The withdrawal of Emirati forces from Yemen following a Saudi airstrike may help defuse a confrontation between the UAE and Saudi Arabia, but the incident has exposed simmering distrust between two Gulf oil powers with long-running differences.
The airstrike by a Saudi-led coalition early on Tuesday on the southern Yemeni port of Mukalla was followed by calls on all UAE forces to leave Yemen, and a statement from Riyadh that its national security was a red line.
The UAE said it was surprised by the strike, shortly before announcing that it was pulling its remaining forces from Yemen for their safety.
The crisis, precipitated by the surprise advance of UAE-backed separatists through southern Yemen in early December, brings to the surface years of divisions between the two Gulf heavyweights on everything from oil quotas to geopolitical influence.
A Gulf source familiar with Saudi thinking told Reuters that the escalation had been triggered by a misperception resulting from talks in Washington in November between Saudi Crown Prince Mohammed bin Salman and U.S. President Donald Trump about the war in Sudan.
High-level talks including phone calls between Saudi Arabia and the UAE had taken place since December though they had not yet yielded results on the ground, the source said.
Any further conflagration between Saudi Arabia and the UAE would bode ill for the financially powerful Gulf, which prides itself on being an island of stability in a turbulent Middle East. Disagreements between Saudi Arabia and the UAE could hamper consensus on oil output decisions. The two are preparing for a virtual meeting with other OPEC+ members on Sunday.
"Relations between the two states are never easy, but the friction does appear to be at its most intense for years," said Neil Quilliam, associate fellow at think tank Chatham House.
DECEMBER ADVANCE
Following their sudden advance in early December, the UAE-backed Southern Transitional Council (STC) forces now hold large swathes of land in Yemen, including in the strategically important Hadramout province.
The STC had previously been an important part of the coalition fighting alongside the Saudi-backed, internationally-recognized government against the Iran-aligned Houthi movement, which holds Yemen's capital Sanaa and the heavily populated northwest.
Their sweep through the south brought the STC within reach of Yemen's border with Saudi Arabia, in an area to which many prominent Saudis trace their origins, lending it cultural and historical significance for them.
It also put Saudi Arabia and the UAE on opposing sides of a smouldering civil war that erupted in Yemen in 2014.
Both Saudi Arabia and the UAE have publicly said they are in talks with Yemeni groups to try and bring the situation under control, but the coalition has now carried out airstrikes in the province twice in the last few days.
The STC has been rejecting calls by the Saudi coalition for its forces to withdraw from the areas it seized, saying it will continue securing Hadramout and Mahra province to its east.
In a statement on the strike in Mukalla, the UAE said it had tried to de-escalate since the STC's advance and denied being behind any operations that would undermine Saudi security or target its borders.
DIVERGENCE ON SUDAN
"Both countries like to play down friction in the relationship and argue that competition amongst states is a normal state of affairs," said Quilliam. "But the intensity of the competition has certainly sharpened in the past year and is playing out in multiple theatres."
One such place is Sudan, a country engulfed in civil war and one of the world's worst humanitarian crises since April 2023.
The Quad, which groups Saudi Arabia, Egypt, the U.S. and the UAE, has led diplomacy on the conflict, but the war has raged on.
Sudan is a sensitive issue for the UAE. U.N. experts and members of the U.S. Congress have accused the country of sponsoring Sudan's paramilitary Rapid Support Forces (RSF), who are fighting the Sudanese army. The UAE denies backing either side.
Trump and the Saudi Crown Prince discussed Sudan at the November meeting in Washington.
The Gulf source said the UAE leadership was angered as they had been "misinformed" that during the November meeting the Saudi Crown Prince had not just asked for further sanctions against the RSF, but also for more direct sanctions against the UAE for its alleged support to the group.
The misperception led to the escalation in Yemen, the source said.
The UAE foreign ministry did not confirm or deny this account and referred Reuters to an earlier statement issued on Friday in which the UAE had welcomed Saudi Arabia's efforts to support security and stability in Yemen and said it also remained committed to backing stability in the country.
PAST INSTABILITY
Anwar Gargash, diplomatic advisor to the UAE president, said on Saturday in a post on X that dialogue and political solutions that preserve friendships and alliances were essential in what he called a "critical stage". He did not clearly reference Yemen or Saudi Arabia in his remarks.
The White House did not immediately respond to a request for comment when asked about the issue.
The Gulf has witnessed instability in the past.
In 2017, Saudi Arabia, UAE, Bahrain, Oman and Egypt choked off Qatar's economy with a boycott, accusing it of backing terrorists, a charge Doha denied.
The latest flare-up appears unlikely to spur a repeat of the Qatar crisis.
"We do have differences over Yemen 100%, and the difference has gone to a higher level with current escalation," said Abdulkhaleq Abdullah, an Emirati academic.
"Allies clash ... But they mend their differences and build on what they have in common."
(Reporting by Maha El Dahan and Samia Nakhoul in Dubai; additional reporting by Timour Azhari in Riyadh and Trevor Hunnicutt in Washington; editing by Michael Georgy, Aidan Lewis)
Financial stability refers to a condition where the financial system operates effectively, with institutions able to withstand shocks and maintain the flow of funds, ensuring economic growth and stability.
Oil output decisions are agreements made by oil-producing countries or organizations, such as OPEC, regarding the quantity of oil to be produced, which can influence global oil prices and economic stability.
Investment management is the professional management of various securities and assets to meet specified investment goals for the benefit of investors, which can include individuals or institutions.
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