Business leaders and investors in the Middle East are expressing heightened concern as strategic tensions between Saudi Arabia and the United Arab Emirates increasingly affect commercial and geopolitical calculations across the region.

Recent developments have underscored a divergence in regional policies, notably in Yemen, where Saudi forces have targeted UAE-linked separatist factions, and broader strategic competition for influence, economic leadership and investment flows is emerging between the two Gulf powerhouses.

Saudi Arabia and the UAE have long been seen as cooperative partners within the Gulf Cooperation Council, jointly promoting economic diversification and investment in infrastructure, energy and global capital markets.

Both countries have also played leading roles in merger and acquisition activity in the Middle East, driving substantial deal volumes and investment values in sectors ranging from energy to technology.

However, analysts note that their strategic priorities are no longer fully aligned as Riyadh and Abu Dhabi pursue distinct regional agendas.

In Yemen, clashes involving Saudi-backed government forces and factions supported by the UAE’s backing have highlighted deepening differences in how each state seeks to shape security outcomes on the Arabian Peninsula and in the Horn of Africa.

Saudi Arabia’s actions reflect concern over territorial integrity and Red Sea access, while the UAE’s support for local actors in southern Yemen illustrates its ambitions for influence in strategic maritime corridors and commercial hubs.

Beyond Yemen, diplomatic and military dynamics have also shifted in other theatres, including Sudan and Somalia, where Saudi and Emirati support for different groups has contributed to regional friction.

These geopolitical strains have prompted business leaders to reassess risk premia and investment strategies, particularly for enterprises operating across GCC markets that rely on cross-border flows of capital and talent.

Economic cooperation and data reflect underlying strength in regional markets; sovereign wealth funds from both Saudi Arabia and the UAE have been central to robust merger and acquisition activity, and non-oil economic growth in key sectors has continued.

Countries in the Gulf have also introduced regulatory and investment frameworks to attract foreign capital and diversify beyond hydrocarbons.

Nonetheless, political and security uncertainties tied to strategic competition are being factored into corporate planning and investor assessments.

Private sector responses include renewed attention to compliance, risk management and diversified market positioning to mitigate potential disruptions arising from geopolitical shifts.

Gulf states’ ambitions to lead in areas such as artificial intelligence, technology and sustainable investment also remain influential in shaping economic outlooks, underscoring both competition and cooperation in an evolving regional landscape.

The evolving Saudi–UAE dynamic illustrates how strategic and security considerations can shape not only diplomatic relationships but also business confidence and commercial decision-making across the Middle East, as companies balance growth opportunities with the complexities of regional geopolitics.