Gulf sovereign wealth funds (SWFs) have hit a record high of $53.9 billion investments throughout 2026 so far. The countries own trillions of dollars in assets under management with stakes in a variety of entities, ranging from cryptocurrency to clean energy. Parallel to this, the hydrocarbon crisis due to the Strait of Hormuz limitations on shipping has caused a reported over $50 billion in losses. Gulf SWFs are helping to hedge losses, causing a shift to a rooted economic strategy less concerned with the volatility of energy politics. While the region holds immense influence due to its high energy export capacities, it now also weilds influence through strategic investments made through SWFs. This shift in influence may be evidenced by the UAE’s OPEC exit, the utilisation of SWFs to finance defence and reduce dependency on American security, and the overall diversification to investments and partnerships in Asia.
Stepping out of OPEC: The UAE’s SWF bet
The Organisation of Petroleum Exporting Countries (OPEC) was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. It was later joined by eleven countries, four of which eventually withdrew, leaving the original OPEC plus Algeria, Congo, Equatorial Guinea, Gabon, Libya, Nigeria and the UAE. The purpose of the organisation is to limit the oil production of the countries so as to ensure global oil markets remain stable and competition remains sustainable. Given that OPEC’s exports account for 50% of global oil trade, the organisation holds significant influence over the stabilisation of global energy pathways. OPEC countries benefit since their combined power acts as a bargaining chip in the international political economy of oil, allowing for high prices and profits. Belonging to the organisation, however, gives the member states limited individual freedoms in oil pricing.
The UAE left OPEC on the 1st of May, 2026. This decision was grounded in two primary variables, according to the Atlantic Council’s analysis – having the freedom to price its oil exports according to domestic requirements, and growing SWF stakes. The UAE’s total SWF assets under management (AUM) exceed $1.8 trillion. SWF asset liquidation acts as a backup plan in the event of energy price volatility, which could allow the UAE to set its individual oil narrative with options on standby. While this transition is still heavily dependent on oil bets, the UAE’s SWFs provide the economic security necessary for such a transition.
Stay ahead of the geopolitical week.
MD Briefing delivers expert analysis across five global fronts — the Indo-Pacific, energy, geoeconomics, European security, and the Middle East — every Monday morning. Free.
Making the Riyadh Independent Again: Reducing American Security Dependency
Riyadh’s Public Investment Fund (PIF) current assets are worth $900 billion, according to the Sovereign Wealth Fund Institute (SWFI). PIF has stakes in domestic infrastructural development and commercial ventures abroad. They divide their investments into three categories, namely the financial portfolio, strategic portfolio, and vision portfolio. Saudi Arabian Military Industries (SAMI) is part of PIF’s vision portfolio, owned wholly by the SWF. SAMI was established in 2017 with the goal of sustaining a domestic defense industry independent of America.
To contextualize, the 1974 petrodollar deal between King Faisal of Saudi Arabia and then US President Nixon basically functioned as a trade deal wherein America would provide Saudi Arabia with lucrative security against its adversaries in the region on the condition that the country sold its oil in dollars. This deal enabled for petrodollar recycling into the US treasury, thus financing American spending. It also ensured that Riyadh would not have to worry too much about bolstering its security capacities on its own. Now, however, with shifting ties with Trump’s America, Saudi Arabia is both diversifying its partnerships and boosting domestic defense capacities. It is able to take this step due to PIF’s economic stabilisation support given its lucrative investment strategy.
SAMI is a key player in boosting domestic capabilities – its production capacities include up-to-date military innovations such as Unmanned Combat Aerial Vehicles (UCAV) for Intelligence, Surveillance, Target Acquisition, and Reconnaissance (ISTAR) operations. It partnered with Turkish company ULAQ Global Autonomous Systems to strengthen maritime defense with the acquisition of Unmanned Surface Vehicles (USV). SAMI also unveiled ground combat vehicles at the World Defense Show, demonstrating its growing capacity as a localised defense manufacturer, helping to diversify from Trump’s cooperative volatility. The PIF SWF has contributed inalienably to this strategic shift towards defense localisation in Saudi Arabia, spreading roots as to Riyadh’s regional power apart from its energy exports.
Investing in Asia
While much of Gulf SWF investments are deployed in Western markets, some SWFs have been hedging bets by strategically funding Asian markets as well. The PIF subsidiary Alat, for example, signed a $200 million deal with Chinese technology firm Dahua to push Dahua’s manufacturing overseas. According to the 2025 Asia House report, all of Gulf SWF financing increased to 17% of its total funding deployment, with further increasing forecasts. UAE’s Mubadala SWF invested a total of $550 million in South Korea and Hong Kong, while the Qatar Investment Authority (QIA) invested around $500 million in China. As of 2026, Gulf SWFs have invested $1.7 billion in Indian commercial entities, including stakes in critical banks such as IDFC First Bank. These investment deployments throughout Asia signal the Gulf’s increasing influence in Asia’s growing markets.
Conclusion
The Gulf’s dependency on oil volatility is starting to shift with a concerted effort to deploy strategic SWFs. Whether it is through enabling the UAE’s economic dependence from the OPEC, making Saudi Arabia self-sufficient in defense and shifting away from the US, or increasing funding in Asia, Gulf SWFs have become a crucial signifier of influence throughout the world. It demonstrates the shift from unpredictable resource dependencies to strategic global investments.
