Geopolitical Risk Spikes: Saudi-UAE Rift and US Sanctions Threaten Oil Stability

The geopolitical risk premium in energy markets is set to rise as tensions flare between traditional OPEC allies, Saudi Arabia and the UAE, overlapping with aggressive new US sanctions targeting Iranian supply chains.

Fracture in the Gulf Alliance

In a rare public dispute, Saudi Arabia has issued a stark warning to the United Arab Emirates regarding operations in Yemen. The conflict centers on the strategic port of Mukalla and the oil-rich province of Hadramout, which shares a border with the Kingdom.

While the UAE has officially denied arming the separatists and signaled an intent to end its “counter-terrorism” mission, the STC (controlling significant territory) has refused to stand down. For Forex and Commodity traders, instability in Hadramout represents a direct threat to regional stability and potential oil logistics, likely supporting Crude Oil (WTI/Brent) prices and safe-haven assets.

US Sanctions Net Widens

Simultaneously, the US Treasury has imposed fresh sanctions on 10 entities linking Iran and Venezuela. The targets include Venezuelan aerospace firms and Iranian nationals accused of facilitating ballistic missile technology and drone transfers.

These dual geopolitical shocks suggest that despite demand-side worries, the supply side of the energy equation remains highly vulnerable to political disruption.