Oil prices shape Gulf states’ geopolitical moves

Houthi-allied tribesmen in Yemen brandish their weapons
Saudi Arabia and UAE will look to exit the costly Yemen conflict, where Houthi forces such as the tribesmen above have proven tougher than expected (source: dpa)
  • Gulf states are facing huge budget deficits due to low oil prices
  • They are already beginning to reduce spending on military, foreign aid and domestic programs
  • The biggest geopolitical impacts include reduced funding for Egypt, less involvement in the Yemen conflict and a burgeoning partnership with Russia

The countries of the Gulf Cooperation Council (GCC) – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) – have all been hit hard by the precipitous drop in oil prices over the past two years. The degree to which each of these states has been affected varies, but all have had to reduce spending. This has important geopolitical impacts – from reduced funding for aid and military activity, to cuts in domestic spending that could escalate instability.

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