The Riyalpolitik 5
The Riyalpolitik 5 highlights five recent geo-economic developments across the Middle East that we’re keeping an eye on.
Major Policy Shift: The UAE walks out of OPEC
Next week, the UAE will leave OPEC and OPEC+ after nearly six decades of membership, with UAE’s Energy Minister Suhail al-Mazrouei telling Al Jazeera the decision was taken unilaterally, without consulting Saudi Arabia or any other member.
Why we care: This rupture is as significant politically as it is for energy markets. OPEC is a cartel of 12 energy-producing countries (led by Saudi Arabia) that produce nearly 50% of all oil traded globally and have jointly set production targets to manage prices. The UAE, the third largest producer in OPEC, has long chafed at production quotas that capped its output well below capacity. The timing and manner of the exit are as telling as the decision itself: Abu Dhabi chose to walk out during a war in which it bore a disproportionate share of Iranian strikes, without warning its Saudi neighbor.
Read alongside the UAE’s pursuit of a US dollar swap line (see below), its sharpened security alignment with Washington, and its increasing strategic competition with Saudi Arabia across the region, the OPEC exit looks less like a production dispute and more like a declaration of strategic independence. The UAE’s departure from OPEC is largely symbolic today as Gulf energy exports continue to be limited by the unresolved conflict in the Strait of Hormuz. But once the strait reopens, the Emirates will be free from quota constraints and become a direct competitor to Saudi, threatening OPEC’s ability to set market prices. As Rystad Energy noted, Saudi Arabia is now left doing more of the heavy lifting on price stability, and the market loses one of its few remaining shock absorbers. The UAE’s departure has also fueled speculation over whether other OPEC members (such as Kazakhstan and even Iraq) might follow.
Big Deal: The UAE and Jordan sign $2.3 billion deal to build new railway in Jordan
L’imad Holding, an Abu Dhabi sovereign wealth fund chaired by Abu Dhabi Crown Prince Khalid bin Mohammed bin Zayed, is partnering with Jordanian government entities and industrial partners to build and operate a 360-kilometer railway connecting Jordan’s phosphate and potash mines to the Port of Aqaba. The deal, which Jordan’s transport minister called the “biggest investment Jordan has witnessed in over 25 years,” creates the UAE-Jordan Railway Company, which will be managed by Etihad Rail, the developer and operator of the UAE’s rail network.
Why we care: The Iran war has laid bare just how vulnerable the Gulf’s maritime chokepoints are. The Aqaba railway is a direct response: a land-based trade corridor that moves goods without tanker, container ships, or the need to transit a strait. The deal is the latest indication that Abu Dhabi is willing to keep deploying capital despite a regional conflict that has degraded key energy infrastructure across the Gulf.
The corridor logic here is the same as in the fiber-optic cables being routed through Syria: whoever controls the land bridge between the Gulf and the Mediterranean controls the premium in a post-Hormuz crisis regional order. The Aqaba line is also designed to eventually connect northward through Jordan and Syria via the revived, Ottoman-era Hejaz Railway, which once linked Damascus to the Hijaz and whose restoration Turkey, Syria, and Jordan agreed to advance in September 2025, giving this historical corridor contemporary geopolitical relevance.
This deal is also significantly about fertilizer supply chains. Phosphate and potash were recently designated as critical minerals by the US Government as they are primary inputs to food production, a market badly impacted by the Russia-Ukraine war. By increasing Jordan’s export capacity and connecting its mines to Aqaba, the project will strengthen Jordan’s role in the global fertilizer market while giving the UAE a deeper foothold in this strategic supply chain.
Source of Friction: The Gulf could be hurting more than the headlines suggest
The Burj Al Arab, one of Dubai’s most recognizable tourism landmarks, announced an 18-month closure for its first refurbishment since 1999, even as regional air traffic remains severely disrupted and visitor demand weakens across the Gulf. More consequentially, the WSJ reported that UAE Central Bank Governor Khaled Mohamed Balama held discussions with Treasury Secretary Bessent about a potential dollar swap line as a financial backstop against a deepening liquidity crisis.
Why we care: The Emiratis made two pointed arguments in Washington: (1) it was Washington’s decision to strike Iran that entangled the UAE in a conflict it did not choose, and; (2) if short of dollars, Abu Dhabi could be forced to conduct oil transactions in Chinese yuan. This was a subtle but direct threat to the dollar’s role as the currency of global oil trade. That threat points to one of the war’s most under-appreciated strategic dynamics: the UAE-China-Iran triangle.
China is the UAE’s largest trading partner and the Gulf’s largest oil buyer. It is also the country whose satellite — the TEE-01B, secretly acquired by the IRGC in late 2024 — was revealed by the Financial Times to have provided high-resolution imagery Iran used to target Prince Sultan Air Base in Saudi Arabia, the US Fifth Fleet in Bahrain, and US facilities in Jordan, Kuwait, and Iraq. The UAE has simultaneously sent investment delegations to China and absorbed the effects of Iranian strikes guided by Chinese technology. Beijing denied the FT’s findings, and in response Trump warned of “big problems.” But the Gulf’s deep economic integration with China and its acute exposure to Chinese-enabled Iranian strikes is the knot no ceasefire has yet begun to untangle. Beyond the facilitation role played by Pakistan, any durable resolution of this conflict runs through Beijing. Washington may not have fully reckoned with that yet.
Under the Radar: Syria establishes its first real foreign exchange rate mechanism
The Central Bank of Syria (CBS) launched the Damascus Foreign Exchange and Gold Market, the first formally regulated currency-and-bullion pricing mechanism in the country’s history. The electronic platform creates a single, transparent official reference rate for the Syrian lira (pound) against the dollar, with the CBS supervising.
Why we care: While the CBS has long published official exchange rates, it never had enough foreign exchange reserves to actually intervene during periods of volatility, so markets largely ignored it. Furthermore, until last year, the CBS was also designated by the US Treasury Department, which made trade finance, correspondent banking, and meaningful investment effectively impossible.
As recently as last week, there were three other unofficial exchange rates for the lira, with fuel, remittances, and the black market each pricing the pound independently of the central bank’s official rate. A credible exchange rate is the foundation on which everything else in an economy is built, including banking, investment, and reconstruction financing. Without one, companies cannot price contracts, attract outside capital, or repatriate profits. This exchange is a necessary precondition for doing business. But whether it can displace entrenched black market actors and other parallel reference prices will depend on the platform’s accessibility, whether the government aligns its own pricing with the new rate, and perhaps most critically, whether Syrians trust their own currency enough to use it.
One Fun Thing: Saudi Arabia just opened the Middle East’s largest water park
This month, Aquarabia, a 62-acre water theme park just outside Riyadh, opened, featuring its much-anticipated innovative attraction: a futuristic two-seater car that carries passengers along an underwater track.
Why we care: Aquarabia is another piece of the larger story of Saudi Arabia’s transformation. Vision 2030 has always been about more than economic diversification; it is a bet that the Kingdom can create a new social contract, create a higher quality of life, more recreation, and keep Saudi riyals circulating in the Kingdom’s economy. It is also a signal that Saudi Arabia is a destination for inbound capital and tourism, not simply a surplus economy writing checks to the rest of the world, and that it aims to be a domestic consumer market that can entice world-class leisure infrastructure on its own terms. Ten years ago, a sprawling water park in Saudi Arabia would have been unimaginable, but Aquarabia demonstrates just how far the Kingdom has come in delivering the social transformation at the heart of Vision 2030. The park sits next to Six Flags Qiddiya City, which also recently opened its doors, and is home to what is reported to be the fastest roller coaster in the world.