Saudi-UAE Tensions Over Yemen

by | Jan 19, 2026 | Uncategorized | 0 comments

Introduction: A Rift Between Gulf Giants

The escalating tensions between Saudi Arabia and the United Arab Emirates over Yemen mark a significant fracture in what was once considered an unshakeable Gulf alliance. On January 19, 2026, the Saudi-backed Yemeni government accused the UAE of operating secret prisons at the Riyan airbase near Mukalla—an allegation the UAE swiftly denied as “deliberate fabrications and misinformation.” This public confrontation represents more than a diplomatic spat; it signals a fundamental realignment of power dynamics in the Middle East that reverberates far beyond the Arabian Peninsula.

For Singapore, positioned 6,500 kilometers away across the Indian Ocean, these developments might seem distant. However, the city-state’s intricate economic web with both Gulf powers means that discord in Riyadh and Abu Dhabi can translate into tangible impacts on Singapore’s energy security, trade flows, investment climate, and strategic positioning in an increasingly multipolar Asia.

Main Development: The Saudi-backed Yemeni government has accused the UAE of operating a secret prison at the Riyan airbase near Mukalla in southern Yemen. The UAE has firmly denied this allegation, calling it “deliberate fabrications and misinformation.”

Key Context:

  • The accusation was made by Salem Al-Khanbashi, governor of Hadramout province, during a media tour arranged by Saudi Arabia
  • This is part of a deepening rift between the two Gulf allies that became public in 2025
  • The UAE officially withdrew its forces from Yemen in December 2025 after nearly a decade of involvement

Background to the Dispute:

  • UAE-backed Southern Transitional Council (STC) forces pushed out Saudi-backed government forces from key provinces in 2025
  • In late December, Saudi Arabia struck what it said was an Emirati weapons shipment to the STC
  • Saudi forces then backed an offensive that led to the STC’s collapse

Broader Implications: The article notes that Saudi-UAE disagreements now span multiple areas including geopolitics, oil output, and fierce economic competition over foreign investment, tourism, and AI development. This public discord is unusual for the Gulf monarchies, which have traditionally kept disagreements private to present a united front against Iran.

Historical Context: From Coalition Partners to Competing Powers

The Saudi-UAE relationship has long been characterized by close cooperation, particularly since the formation of the Saudi-led coalition in Yemen in 2015. Both nations shared concerns about Iranian influence in the region and worked together to counter the Houthi movement, which they viewed as a proxy for Tehran.

However, cracks began appearing in 2019 when the UAE significantly reduced its military footprint in Yemen, citing achievement of its objectives. The relationship deteriorated further in 2025 when UAE-backed Southern Transitional Council (STC) forces pushed Saudi-backed government troops out of key provinces. The rupture became complete in late December 2025 when Saudi Arabia struck what it claimed was an Emirati weapons shipment destined for the STC in Mukalla, followed by a Saudi-backed offensive that led to the STC’s collapse and the UAE’s official withdrawal from Yemen after nearly a decade of involvement.

The dispute now extends far beyond Yemen. The two Gulf monarchies are engaged in fierce economic competition over foreign investment, tourism, and capturing the largest share of the global artificial intelligence boom. Their disagreements span geopolitics and oil output policies—two areas directly relevant to Singapore’s interests.

Singapore’s Economic Ties: A Delicate Balancing Act

The UAE: Singapore’s Largest Gulf Partner

The UAE is Singapore’s largest trading partner and investment destination in the Middle East and North Africa region, with bilateral merchandise trade reaching SGD 24.1 billion in 2024. This relationship is formalized through the Singapore-UAE Comprehensive Partnership signed in February 2019—the first such framework between Singapore and a Middle Eastern nation.

The depth of this partnership is evident across multiple sectors. Over 600 Singapore companies operate in the UAE, focusing on fintech, healthcare, infrastructure, and education. Major Singaporean firms like Rotary Engineering and Trescorp have undertaken significant engineering and construction projects in UAE locations including Fujairah and Jebel Ali. Conversely, major UAE entities such as DP World, Masdar, and Space42 maintain substantial operations in Singapore, contributing to collaboration in renewable energy, electronics, logistics, and technology.

Singapore’s investments into the UAE reached SGD 3.9 billion in 2022, up from SGD 2.7 billion in 2021, concentrated in oil and gas, information technology, infrastructure, and real estate sectors. The UAE is also a significant investor in Singapore across key sectors including renewable energy, electronics, logistics, and technology.

Saudi Arabia: Energy Cornerstone and Emerging Partner

While the UAE is Singapore’s largest Gulf trading partner overall, Saudi Arabia occupies a critical position in Singapore’s energy security architecture. Singapore has maintained a Bilateral Investment Treaty with Saudi Arabia since 2007, providing investors protection against discriminatory treatment and illegal property seizure.

Although the region’s share of Singapore’s oil imports has fallen from almost 50% in 2000 to 30% in 2019, this decline reflects diversification rather than reduced strategic importance. The Gulf Cooperation Council (GCC), which includes both Saudi Arabia and the UAE, supplies approximately one-third of Singapore’s oil imports—crucial for a nation that is the world’s largest bunkering port and among the five largest exporters of oil products globally.

Singapore companies have significant infrastructure projects in Saudi Arabia, including oil storage tank construction in Jubail and broader engineering works. The relationship extends beyond energy, with both nations being members of the Future of Investment and Trade Partnership announced in September 2025, alongside New Zealand and Switzerland—a coalition focused on open and fair trade among small and medium-sized, trade-dependent nations.

The GCC Free Trade Agreement: A Unified Framework Under Strain

Both Singapore’s relationships with Saudi Arabia and the UAE operate within the broader framework of the Gulf Cooperation Council-Singapore Free Trade Agreement (GSFTA). The GSFTA eliminates most tariffs (up to 99%) on Singapore exports into the GCC, providing preferential market access to all six GCC states: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

The effectiveness of this framework depends on GCC cohesion. As Saudi-UAE tensions escalate, questions arise about the sustainability of unified GCC positions on trade, investment, and economic policy. Any fragmentation of the GCC’s collective approach could complicate Singapore’s engagement with the region.

Energy Security: Singapore’s Achilles Heel

Oil Supply Diversification and Regional Stability

Oil (crude and oil products combined) is the second largest item of merchandise trade by value, accounting for 23.7% of the country’s total imports and 18.6% of exports in 2018. Singapore imports crude oil primarily for its world-class refining sector on Jurong Island, then re-exports refined products throughout Asia.

The UAE has emerged as particularly important in Singapore’s oil supply chain. The UAE replaced Saudi Arabia as Singapore’s top oil supplier since 2011, even as Saudi crude exports to Singapore declined due to the kingdom prioritizing shipments to China. In 2014, more than two-thirds of Singapore’s crude oil imports came from the UAE, Saudi Arabia, and Qatar combined.

The Saudi-UAE rift introduces new uncertainty into this supply equation. While both nations continue to honor existing commercial contracts, political tensions could affect future supply arrangements, pricing negotiations, and the willingness of either party to serve as a reliable swing supplier during supply disruptions elsewhere.

LNG and Gas: Qatar’s Growing Role

Beyond oil, Singapore’s transition toward natural gas for power generation has created new dependencies on Gulf suppliers. Gulf LNG exporters are likely to result in LNG accounting for half of Singapore’s gas imports by 2025, up from just under 30% today. Qatar, the world’s lowest-cost LNG producer, plays an increasingly important role in Singapore’s domestic energy security, where gas generates 95% of electricity.

The Saudi-UAE dispute has the potential to affect broader GCC energy coordination. If the rift deepens, it could complicate collective decision-making on energy policy, production levels, and pricing—all factors that influence Singapore’s energy costs and security.

The Green Hydrogen Frontier

Looking forward, Singapore’s ambitious target of halving 2030 peak greenhouse emissions by 2050 will likely require imports of green hydrogen to decarbonize power grids and maritime transportation. Space and weather constraints limit Singapore’s ability to generate renewable energy domestically, and the nation lacks geological formations for carbon storage.

Both Saudi Arabia and the UAE are investing heavily in green hydrogen production, though with different approaches. Saudi Arabia’s NEOM project is developing massive green hydrogen facilities, while the UAE is currently more focused on blue hydrogen (derived from natural gas with carbon capture). A recent study identified Oman’s enormous 25-GW project as among the top five green hydrogen projects in the early or demonstration phases that would be the best fit for Singapore by 2050.

Competing Saudi and Emirati hydrogen export strategies could actually benefit Singapore by creating competitive pricing and supply options. However, if tensions lead to reduced cooperation on regional infrastructure or trade routes, it could increase costs and complexity for Singapore’s hydrogen import plans.

Maritime Security: The Critical Connector

Singapore’s Strategic Position

It was estimated in 2016 that any disruption in the Strait would cost the global economy over $200 billion per year, highlighting the critical importance of the Malacca Strait to global trade. Singapore’s prosperity is inextricably linked to the free flow of maritime commerce through this chokepoint and other vital waterways connecting it to global markets.

The escalation in Yemen has direct implications for maritime security in the Red Sea and Gulf of Aden. Since June, Ambrey has logged 112 marsec incidents, including 31 linked to Houthi activity through 2025. The Houthis continue to attack both Israel and commercial vessels, with their target profile remaining consistent—ships with Israeli ownership, operation, or trade links.

Red Sea Disruptions and Singapore’s Trade Routes

The Houthi attacks in the Red Sea have forced many vessels to reroute around the Cape of Good Hope, significantly increasing transit times and costs. While Singapore is geographically distant from the Red Sea, approximately 12% of global trade passes through this route annually, worth over $1 trillion. Disruptions affect global shipping costs, insurance premiums, and delivery times—all of which impact Singapore’s role as a major transshipment hub and trading center.

If Houthi attacks escalate and Red Sea maritime traffic experiences a major disruption as a result, both global energy security and dry cargo trade would suffer. Ships have been observed changing destinations mid-voyage, with some vessels initially bound for European ports via the Suez Canal rerouting to Singapore and then around Africa.

The Saudi-UAE dispute over Yemen complicates efforts to resolve the Houthi threat. With the two Gulf powers at odds, coordinated military or diplomatic responses become more difficult. Saudi Arabia’s focus on containing UAE influence in southern Yemen may compete with efforts to neutralize Houthi capabilities in the north, prolonging instability that affects global shipping lanes.

Singapore’s Maritime Security Engagement

The Joint Maritime Information Center (JMIC), a collaborative effort among Combined Maritime Forces, United Kingdom Maritime Trade Operations, the European Union Maritime Security Center Indian Ocean, the Singapore Navy’s Information Fusion Center, and others, is providing recommendations to the shipping industry regarding threats in the Red Sea and Gulf of Aden regions.

Singapore’s participation in these multilateral security frameworks demonstrates its commitment to maintaining freedom of navigation. However, the effectiveness of such frameworks depends partly on cooperation from regional powers. If Saudi-UAE competition extends to maritime security cooperation, it could reduce the coherence of responses to threats like Houthi attacks.

Financial Services and Investment Flows

Singapore as a Wealth Management Hub

Singapore has positioned itself as Asia’s premier wealth management destination, with 1,650 single-family offices in 2025 managing substantial assets. The UAE and Saudi Arabia are both significant sources of capital flowing into Singapore’s financial sector.

Gulf sovereign wealth funds hold combined assets exceeding $4 trillion, with major players including the Abu Dhabi Investment Authority (ADIA), Mubadala Investment Company, the Qatar Investment Authority, and Saudi Arabia’s Public Investment Fund (PIF). These entities invest globally in infrastructure, technology, real estate, and private equity—sectors where Singapore offers both investment opportunities and wealth management services.

Saudi Arabia’s Public Investment Fund has transformed from a domestic investment body into a global capital powerhouse, with an objective to achieve $2 trillion AUM by 2030. Both Saudi and Emirati funds have invested in Singapore’s technology sector, real estate markets, and financial infrastructure.

The Saudi-UAE rift introduces uncertainty into investment flows. If political tensions translate into economic competition, both nations might accelerate efforts to develop their own financial centers at the expense of neutral third-party hubs like Singapore. Alternatively, heightened tensions could drive more Gulf capital toward Singapore as a stable, neutral jurisdiction for wealth preservation.

Economic Competition and Singapore’s Opportunity

The UAE and Saudi Arabia are also engaged in fierce economic competition, including over who can attract more foreign capital and visitors and take the biggest share of the global AI boom. This competition creates both risks and opportunities for Singapore.

On one hand, if both Gulf nations significantly scale up incentives to attract businesses, talent, and capital, Singapore could face stronger competition for foreign direct investment in sectors like fintech, artificial intelligence, and green technology. Both Saudi Arabia and the UAE have announced massive development projects—Saudi’s NEOM and UAE’s various smart city initiatives—that compete with Singapore for positioning as innovation hubs.

On the other hand, Singapore’s neutrality and established infrastructure provide competitive advantages. Businesses concerned about political risk in the Gulf may prefer Singapore’s stable regulatory environment and proven track record. Singaporean firms with operations in both Saudi Arabia and the UAE could benefit from serving as neutral intermediaries as the two nations compete for technological advancement and economic diversification.

Trade and Investment: Navigating Dual Relationships

The Challenge of Non-Alignment

Singapore has long maintained a foreign policy of principled non-alignment, seeking to maintain positive relations with all major powers. This approach has served the city-state well in managing relationships with the United States and China despite their strategic competition.

The Saudi-UAE tensions present a similar challenge on a smaller scale. The Kingdom of Saudi Arabia is considered the first largest trading partner in the Arab world and the third in the world with the United Arab Emirates, as the UAE acquired the largest share by 67.8%, with a total of $20 billion out of the total trade exchange between the KSA and the Gulf countries. Their deep economic interdependence makes their current rift particularly significant.

For Singapore, maintaining balanced relationships with both nations becomes more complex as they compete. Investment delegations, high-level visits, and trade negotiations must be carefully calibrated to avoid appearing to favor one side over the other. Any perception of bias could affect Singapore’s standing with the aggrieved party.

Opportunities in Triangular Trade

Despite the challenges, Singapore’s position as a neutral trading hub could benefit from Saudi-UAE competition. As both nations diversify their economies away from hydrocarbons, they require sophisticated services, technology, and expertise—areas where Singapore excels.

The UAE seems keen to deepen engagement with blocs of countries – or minilaterals – that do not necessarily include China or the United States, given sensitivities around strategic competition. The Future of Investment and Trade Partnership, which includes Singapore, UAE, New Zealand, and Switzerland, represents exactly this type of coalition.

Singapore can leverage such frameworks to facilitate trade between Gulf nations and Asia, potentially serving as an intermediary even as direct Saudi-UAE economic links face political strain. Singapore companies could also benefit by providing services to both Saudi and Emirati projects without being perceived as exclusively aligned with either party.

Strategic Implications and Risk Scenarios

Scenario 1: Contained Competition

In this most benign scenario, Saudi-UAE tensions remain largely rhetorical, with practical cooperation continuing in areas of mutual interest. Both nations recognize that their economic diversification goals require international partnerships, including with Singapore. Trade and investment flows continue largely uninterrupted, with Singapore benefiting from both relationships.

Implications for Singapore:

  • Minimal disruption to existing economic relationships
  • Continued access to Gulf energy supplies at competitive prices
  • Sustained investment flows from both Saudi and Emirati sources
  • Opportunities to position Singapore as neutral facilitator for specific projects

Scenario 2: Economic Decoupling

A more concerning scenario involves Saudi Arabia and the UAE actively working to reduce economic interdependence, with ripple effects throughout the region. This could include:

  • Reduced energy cooperation within OPEC+, affecting global oil prices
  • Competing infrastructure projects that duplicate capacity
  • Pressure on third parties to choose sides in various regional disputes
  • Fragmentation of GCC unity on trade and investment policies

Implications for Singapore:

  • Increased volatility in energy prices and supply arrangements
  • Pressure to demonstrate evenhandedness in investment and trade relationships
  • Potential benefits from serving as alternative venue for capital flight from both nations
  • Complications in regional trade frameworks like the GSFTA

Scenario 3: Regional Destabilization

The most severe scenario would see Saudi-UAE competition escalate beyond economics into proxy conflicts similar to their diverging positions in Yemen. While unlikely, this could involve:

  • Intensified military competition and arms build-up
  • Destabilization in countries where both have interests (Libya, Sudan, Horn of Africa)
  • Disruption to maritime security cooperation
  • Broader fragmentation of Gulf security architecture

Implications for Singapore:

  • Serious threats to maritime security in critical chokepoints
  • Disruption to energy supplies and dramatic price increases
  • Flight of capital from the region, potentially benefiting Singapore’s financial sector
  • Need for enhanced maritime security measures and alternative supply arrangements

Policy Recommendations for Singapore

1. Diversify Energy Sources and Routes

Singapore should accelerate efforts to diversify both energy suppliers and supply routes. While the Gulf will remain important, reducing dependence on any single region provides resilience against political disruptions. This includes:

  • Expanding LNG import infrastructure and diversifying supplier base
  • Advancing green hydrogen import planning with multiple source countries
  • Maintaining strategic petroleum reserves at robust levels
  • Investing in renewable energy and energy efficiency despite geographical constraints

2. Strengthen Multilateral Frameworks

Singapore’s participation in multilateral frameworks provides diplomatic channels that transcend bilateral tensions. The city-state should:

  • Continue active engagement in GCC-Singapore trade forums
  • Deepen involvement in maritime security cooperation through mechanisms like the Information Fusion Center
  • Support initiatives that bring Saudi Arabia and UAE together in neutral settings
  • Utilize ASEAN platforms to engage Gulf states collectively

3. Maintain Scrupulous Neutrality

As Gulf competition intensifies, Singapore must carefully manage its relationships to avoid being drawn into taking sides:

  • Ensure balanced high-level engagement with both nations
  • Maintain transparency in investment approvals and trade facilitation
  • Avoid rhetoric or positions that could be interpreted as favoring one party
  • Emphasize Singapore’s role as neutral hub for all Gulf nations

4. Leverage Economic Opportunities

While managing risks, Singapore should position itself to benefit from areas where Gulf competition creates opportunities:

  • Market Singapore as neutral venue for Gulf capital seeking stability
  • Offer Singaporean firms’ expertise to both Saudi and Emirati development projects
  • Develop specialized services for family offices and sovereign wealth funds from both nations
  • Position Singapore as technology and knowledge transfer hub serving both countries’ diversification efforts

5. Enhance Regional Partnerships

Singapore should strengthen ties with other stable regional partners to reduce dependence on any single relationship:

  • Deepen economic engagement with other GCC members (Qatar, Kuwait, Oman)
  • Expand energy partnerships in Asia-Pacific region
  • Utilize trilateral frameworks bringing together Gulf, Asian, and other partners
  • Support regional integration efforts that reduce bilateral dependencies

Conclusion: Navigating Uncertainty

The escalating tensions between Saudi Arabia and the UAE over Yemen represent more than a localized conflict—they signal a fundamental shift in Gulf regional dynamics with global implications. For Singapore, positioned at the crossroads of global trade routes and deeply integrated with Gulf energy and financial markets, these developments demand careful attention and nimble diplomacy.

Singapore’s success in navigating great power competition between the United States and China demonstrates the viability of principled non-alignment combined with strong economic relationships. The same approach can guide Singapore’s management of Gulf tensions, but the specific nature of the city-state’s dependencies—particularly in energy security—requires proactive risk management.

The most immediate concerns involve potential disruptions to energy supplies, increased maritime security threats from the Yemen conflict, and volatility in investment flows. However, the situation also presents opportunities: positioning Singapore as a neutral financial hub for Gulf capital, serving as an intermediary for technology and knowledge transfer, and potentially benefiting from competition between Saudi and Emirati development initiatives.

As both Gulf powers pursue ambitious economic diversification and compete for global influence, Singapore’s established strengths—political stability, rule of law, efficient infrastructure, and strategic location—become even more valuable. The key is maintaining these advantages while managing the risks inherent in deepening relationships with two increasingly competitive regional powers.

The coming months will test Singapore’s diplomatic agility and economic resilience. Success will require a delicate balance: strong enough relationships with both Saudi Arabia and the UAE to secure Singapore’s interests, yet neutral enough to avoid becoming entangled in their disputes. It is a challenge Singapore has faced before with other competing powers, and one it must navigate successfully to protect its prosperity in an increasingly multipolar world.