Saudi-UAE Alignment with US Coalition Against Iran Heightens Energy Supply Risks

Saudi Arabia and the UAE are significantly deepening their military involvement and logistical support for the US-led coalition against Iran. In a strategic move, Riyadh has opened the King Fahd Air Base in Taif to US forces to mitigate risks from Iranian drone strikes. Concurrently, the UAE has signaled its readiness for a potential conflict lasting up to nine months, marking a departure from previous cautious neutrality. This shift follows repeated Iranian attacks on Gulf energy infrastructure, prompting a push for military action to neutralize regional threats. The prospect of a prolonged conflict is expected to keep oil prices, including XTI/USD and XBR/USD, elevated due to supply disruption fears. Market participants are closely monitoring the impact on regional stability and currency pegs as geopolitical tensions escalate in the Middle East.

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