The growing geopolitical and economic rivalry between Saudi Arabia and the United Arab Emirates (UAE) has heightened concerns across the global financial sector.

According to a Bloomberg report citing senior executives familiar with the matter, leading global banks and asset management firms—including Goldman Sachs Group, Morgan Stanley, BlackRock, and Brookfield—have begun drafting contingency plans to prepare for a potential further deterioration in relations between the two Gulf nations.

Executives stated that the tension between the two largest economies in the Persian Gulf has caused serious apprehension within global financial institutions. Wall Street representatives fear being caught in the crossfire should the competition between these two traditional allies grow more severe.

For years, these institutions have made intensive efforts to expand their operations in both the Saudi and Emirati markets. The sovereign wealth funds controlled by the two nations manage more than $3 trillion in collective assets, and both Riyadh and Abu Dhabi have deployed billions of dollars into artificial intelligence, finance, and infrastructure in recent years.

Bloomberg detailed the scale of the anxiety:

“The concerns are high enough to prompt internal discussions at some global investment banks and by officials at least one government in the region on how to navigate a further escalation of economic competition.”

While executives noted they do not anticipate a direct military conflict between the two countries, they warned that if both sides adopt increasingly assertive and uncompromising stances, financial institutions could face far more difficult choices between Riyadh and Abu Dhabi in the future.

Hussein Nasser-Eddin, chief executive officer of risk management firm Crownox, also cautioned that the friction between the two nations cannot be ignored and advised that developments must be monitored closely.

Despite rising tensions, official statements from both countries maintain that bilateral relations continue to function normally.

An Emirati official told Bloomberg that Riyadh and Abu Dhabi maintain “deep-rooted and robust economic and commercial ties, supported by significant trade and investment flows.”

The official added that the UAE Ministry of Economy has not received any complaints regarding bank transfers.

Meanwhile, the Saudi Central Bank said in a written statement that the kingdom’s financial sector “operates within a strong regulatory framework, and there are no direct restrictions targeting specific countries.”

A Saudi official providing information on working visas stated that visas continue to be issued in accordance with employer demands, and no changes have been made to application procedures. However, the same official left questions regarding the future of bilateral relations between Saudi Arabia and the UAE unanswered.

Despite these official assurances, developments on the ground suggest a different reality. The Financial Times reported last week that Saudi Arabia has delayed or blocked certain wire transfers bound for accounts in the UAE.

Sources speaking to the newspaper indicated that since May, transfers from Saudi banks to accounts belonging to companies and individuals in the UAE have frequently been returned or held without any justification being provided.

Deep divergence over Yemen, Sudan, and Iran

The long-standing rivalry for regional influence between the two countries led to a distinct rupture in late 2025 and the early months of 2026 over Yemen.

Having launched a joint military campaign against Houthi militias in 2015, the two allies subsequently found themselves at cross-purposes. Following attempts by the UAE-backed separatist Southern Transitional Council to declare independence in southern Yemen, Saudi Arabia took military steps targeting Emirati-backed militias in the region.

Following this escalation, the UAE announced the termination of its military mission in Yemen.

The dispute between the two capitals has also manifested in Sudan. Riyadh has openly opposed the UAE’s backing of the Rapid Support Forces (RSF), choosing instead to support the Sudanese armed forces and official state institutions.

Significant policy differences also persist regarding regional security, particularly concerning relations with Iran. Following the failure of the US maximum-pressure campaign aimed at regime collapse in Tehran, Saudi Arabia prioritized its own security by choosing a path of direct dialogue with Iran.

Bloomberg reported in May that Saudi Arabia had rejected a proposal championed by the UAE to organize a coordinated, joint Gulf military strike against Iran.

France is evaluating the creation of alternative energy routes through Syria to mitigate potential disruptions in the Strait of Hormuz following the resumption of hostilities between the United States and Iran. French Foreign Minister Jean-Noël Barrot stated that Paris is working on new transit routes for the transport of Persian Gulf oil, with Syria emerging as a prominent option in this context.

“Among the initiatives we have pursued since the beginning of this crisis is the concept of preparing alternative routes, in order to avoid remaining dependent on blockages that could occur here or there,” Barrot said.

Barrot indicated that Syria, which has entered a process of reunification following the collapse of the Bashar al-Assad administration, could become a “new regional hub.” The French minister characterized the country as a strategic corridor that could transport Persian Gulf oil to the Mediterranean, thereby reducing the impact of potential shipping disruptions in the Strait of Hormuz.

Stating that France wishes to expand commercial and economic cooperation with the Damascus administration, Barrot expressed that they aim to establish a secure transit route for Gulf producing nations through this cooperation.

According to Barrot, implementing this plan requires a comprehensive assessment of existing infrastructure and the provision of necessary security guarantees. The French minister noted that these efforts are of critical importance for securing global energy markets.

Barrot’s remarks followed French President Emmanuel Macron’s visit to Damascus on Tuesday. During the visit, Macron met with Ahmed Shara, the former al-Qaeda leader who has declared himself President of Syria.

Patrick Pouyanné, the Chief Executive Officer (CEO) of TotalEnergies, was among the delegation accompanying Macron. Characterizing Syria as a country situated “at the crossroads of the Middle East,” Pouyanné said it could establish a vital energy link between Iraq and the Mediterranean.

In response to the potential closure of the Strait of Hormuz, Iraq has been shipping its oil via tankers through Syria for export since April.

More than 600,000 tons of fuel were exported through this route between April and June. Last month, Iraqi and Syrian officials discussed the reactivation of the Kirkuk-Baniyas oil pipeline and the establishment of energy transit mechanisms.

TotalEnergies has also signed a memorandum of understanding for an offshore exploration block in the Mediterranean. However, Pouyanné stated that beyond this, the company currently has no concrete projects under development.

Stating that security conditions in the country have not yet stabilized, Pouyanné said, “It is clear today that the security situation does not yet permit us to operate here. However, I believe coming here, to Damascus, is a positive initiative.”

Shortly after Pouyanné’s statements, two bombs reportedly exploded near the Four Seasons Hotel, where the French delegation was staying.

Stating that the Syrian administration must be given time to establish control over the country, Pouyanné said, “We must not demand too much,” adding, “We need to be a little patient.”

Senior US military commanders approved strike lists despite automated system warnings indicating that intelligence on certain targets in Iran was years out of date and required revalidation, according to a CNN report citing three sources familiar with the decision-making process.

The warnings were bypassed to “speed things up” under intense pressure to rapidly designate targets during the opening days of the conflict. One of the targets approved by commanders under these conditions resulted in a strike on a school in Minab.

This military decision is directly linked to the February 28 strike on the Shajara Tayyiba School in Minab, which killed at least 168 children and 14 teachers. The heavy loss of life makes the strike one of the mass casualty events involving the highest number of civilian deaths in the recent history of the US military.

According to the sources, automated system warning messages indicating that the intelligence was obsolete were already integrated into the database used during the target development process. Within this system, a target could only be added to a strike list with the approval of a senior officer. Two sources stated that the decision by senior commanders to ignore these warnings directly contributed to the school being targeted “by mistake.”

Military officials reportedly realized within days of the strike on the school that the error stemmed from outdated information. Despite the passage of months, the Pentagon has not released its investigation report on the incident.

A White House official stated that the investigation remains ongoing, asserting, “As we have said before, the US does not target civilians.”

The Pentagon referred inquiries on the matter to US Central Command (CENTCOM), which declined to comment, citing the active investigation.

School and military facility were located within the same compound

The strike reportedly occurred while the US military was targeting an Islamic Revolutionary Guard Corps (IRGC) facility located near the Shajara Tayyiba School. Initial military investigative findings also pointed to this conclusion.

Satellite imagery reveals negligence in the target analysis process. Imagery from 2013 shows the school and the IRGC base located within the same compound, whereas imagery from 2016 clearly indicates that the school had been separated from the base by a fence and provided with a separate entrance.

In satellite imagery dated December 2025, dozens of children can be seen playing in the schoolyard.

The strike took place on the first day of operations following Donald Trump’s decision to launch military action, a period during which military officials and intelligence analysts worked under intense pressure to update thousands of targets.

Analysts were unable to update all records in the Pentagon database prior to the operation. As a result, records for multiple targets—including the IRGC facility adjacent to the elementary school—consisted of information that was more than 10 years old.

Due to the accelerated timeline, analysts prioritized updating “high-priority” records, which included moving targets with a high probability of being struck first and locations posing an immediate threat to US forces. Because fixed facilities were deemed a lower priority, the information for the facility near the school was not updated.

Disconnected databases and staffing shortages compounded the error

At the center of the investigation are two separate targeting databases used by the Pentagon. These are known as the Modernized Integrated Database (MIDB), which was built in the 1980s and relies on manual data entry, and the Mitigation and Analysis Reporting System (MARS), a new artificial intelligence-backed digital platform.

Both systems indicated that information needed to be updated before use. However, efforts to fully transition to the MARS system were reportedly years behind schedule, leaving official targeting data still dependent on the legacy MIDB system.

An intelligence analyst had previously noted changes on the ground in a separate digital tool, but because this tool was not connected to the official targeting database, the information did not reach commanders. How this disconnect influenced the targeting of the school is also being examined as part of the investigation.

Following the strike, Donald Trump suggested that Iran might be responsible for the incident, later asserting that responsibility might never be determined. Defense Secretary Pete Hegseth stated that the strike would be thoroughly investigated, claiming that the US takes every possible measure to prevent civilian casualties.

However, due to cuts implemented early in Hegseth’s tenure, Civilian Harm Mitigation and Response (CHMR) teams within CENTCOM were reportedly facing severe staffing shortages.

Under the cuts made by Hegseth prior to the conflict with Iran, the 10-person civilian casualty specialist staff at CENTCOM was reduced to a single full-time employee.

Sources added that while the remaining staff did everything they could, they lacked adequate resources due to the budget and personnel cuts implemented by Hegseth.