The Impact of Oil & Gas on the Economy of UAE

Assessing the contribution of oil & gas to the UAE's economy, challenges in reducing dependency & the country's transition towards renewable energy

The economy of the United Arab Emirates is quite liberal. This warm reception of commerce and trade dates back to the earliest days of the Gulf, when ships traveled as far as India and along the East African coast to Mozambique.

Nomadic farming, date palm cultivation, fishing, pearling, and sailing all contributed to the region’s economy before oil was discovered in the 1950s. Many industries, including retail and wholesale commerce as well as real estate, have had an impact on the economy since oil was discovered. Find out more about them here.

With its business-friendly free zones and rapidly expanding economy, the United Arab Emirates (UAE) remains an important regional hub. Forecasts for 2020 put the UAE’s GDP at $359 billion. This is a result of the United Arab Emirates’ (UAE) abundance of natural resources, which include 10 percent of the world’s oil reserves and the world’s fifth-largest natural gas reserves.

Dubai’s economy is not dependent on oil exports, despite widespread misconception to the contrary. The country’s physical infrastructure was improved during the 1960s through the 1990s because of the oil money it received. With two of the world’s largest ports and a bustling international aviation freight center, trade continues to be the backbone of Dubai’s economy.

Aluminum smelting, automobile manufacture, and cement making are just some of the industries that have set up shop in the Jebel Ali free-trade zone since its inception in the 1980s.


Efforts to entice overseas investors have picked up pace in the modern era. Free zones like Jebel Ali have been set up so that international firms can set up shops in Dubai independently of any local partners.

The greatest of them, which has seen extraordinary success, is now home to more than 6,400 businesses, the vast majority of which are based in Europe or North America.

The city began marketing itself as a high-end vacation spot in the 1990s when it began investing a sizable portion of its GDP in lavish hotels, theme parks, and other tourist attractions.

The real estate market in Dubai took off once the city started selling 99-year leases to international investors in 1998. Due to its special status as a separate legal jurisdiction under the UAE constitution, the Dubai International Financial Centre, which opened in 2006, has its own commercial and civil framework based on English common law.

As a result of the global credit crisis, the financial and real estate markets collapsed in 2009. Dubai was able to avoid defaulting on its commitments thanks to a $10 billion loan from Abu Dhabi, and the real estate market quickly rebounded as a result.

United Arab Emirates
United Arab Emirates

An Overview of the UAE’s Economy

The United Arab Emirates has a prosperous, open market with a high GDP per capita and a substantial trade surplus every year. The CIA World Factbook reports that the oil and gas industry now accounts for just 30% of GDP due to effective economic diversification measures.

A sophisticated state with a high level of life, the United Arab Emirates (UAE) has seen a dramatic shift since oil was discovered there about 60 years ago. Budgets for employment development and infrastructure improvement have been boosted.

And it’s allowing the private sector to get more involved in utilities. Foreign investors are enticed by the country’s free trade zones, which allow 100 percent foreign ownership and no taxes.

Although the United Arab Emirates is one of the most diverse countries in the Gulf Cooperation Council, its reliance on oil presents a serious long-term concern. The United Arab Emirates (UAE) has reduced spending, notably on social programs, due to low oil prices.

UAE's economy
UAE’s economy

In August 2015, the government cut back on fuel subsidies, and in October 2017, it instituted excise taxes (50 percent on sugary carbonated beverages, 100 percent on energy drinks, and 200 percent on cigarettes).

Economic diversification, establishing the UAE as a worldwide commerce and tourist hub, expanding the manufacturing sector, and expanding the number of jobs available to UAE nationals through better education and more work in the private sector are all priorities in the UAE’s five-year plan.

Oil & gas production as a source of income in the economy of the UAE

The United Arab Emirates (UAE) has a wealth of prospects for American oil and gas exporters.

The United Arab Emirates (UAE) is among the top 10 oil-producing countries in the world. Abu Dhabi is home to around 96 percent of the country’s 100 billion barrels of known oil reserves, placing it sixth in the world. Daily oil and liquids production in the UAE averages 3.2 million barrels.

The United Arab Emirates (UAE) economy continues to rely heavily on hydrocarbons, which account for 30% of GDP and 13% of exports, respectively. The United Arab Emirates continues to place a high priority on maximizing the cash it receives from oil and gas exports. The United Arab Emirates (UAE) has set a “net-zero” emissions target and has made the energy transition a top priority.

Economy of UAE
Economy of UAE

The United Arab Emirates wants to increase its output of unconventional oil and gas. The United Arab Emirates is estimated to have about 215 trillion cubic feet of known natural gas reserves, making it the seventh biggest in the world, according to data from the U.S. Energy Information Administration.

Over eighty trillion cubic feet of gas reserves were discovered in Jebel Ali, the United Arab Emirates (UAE) declared in 2020. By the year 2030, the government hopes to stop relying on imports of natural gas. To fuel its power plants and desalinization facilities, the United Arab Emirates (UAE) now imports natural gas from Qatar through the Dolphin pipeline.

The tourism industry is a source of income for the UAE’s economy

The United Arab Emirates, and Dubai in particular, have been more popular vacation spots since the 1990s. The city has launched a vigorous advertising effort to promote Dubai and the UAE as a must-see destination.

The city’s attractions—including its buildings, transportation, hotels, retail centers, beaches, deserts, and entertainment venues like Ski Dubai and Atlantis—draw in millions of tourists every year.

The tourism industry is a source of income for the UAE’s economy
The tourism industry is a source of income for the UAE’s economy

Travelers from all over the world come to Dubai to indulge in little retail therapy and take advantage of the city’s inexpensive pricing on everything from gadgets to clothing to cosmetics to shoes to chocolates to gold. The ‘underground’ economy includes prostitution and sex tourism despite their lack of formal recognition.

In 2011, Dubai hotels saw a rise from the 2010s 8.2 million visitors to 2011’s 9 million, according to data compiled by the Department of Tourism and Commerce Marketing (DTCM).

There were 387 hotels in 2011, with a combined 53,000 guest rooms. However, hotel occupancy rates remained stable at 70% in 2010 and 74% in 2011, reflecting the consequences of the financial crisis.

The DTCM study states that in 2010, tourism brought in $4 billion, up from $3.7 billion in 2009. About USD 3.4 billion of that total was generated from hotel rooms, with the remainder coming from apartment leases within hotels.

The tourism industry effects on the UAE’s economy
The tourism industry effects on the UAE’s economy


The UAE has a thriving economy thanks to its advantageous position, healthy financial reserves, sizable sovereign wealth fund, tempting investor home economies, stable government expenditure, a progressive policy of economic diversification, free zones, and growing Investments.

We’ve chosen some of the UAE’s most important sources of income to talk about in this article. UAE is one of the most developed and wealthiest countries in the world. You can’t talk enough about its thriving economy. We hope that this article helps you get a little perspective on this subject. Share your thoughts with us through our social media.

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