Energy interconnectivity is increasingly shaping geopolitical landscapes in ways that conventional diplomacy often cannot. Nowhere is this more evident than in the evolving relationships among the middle powers of Eurasia. For example, Azerbaijan and the United Arab Emirates (UAE) are developing a shared framework that is helping stitch together two long-conflicted regions that were usually considered separately: the South Caucasus and the Middle East.
As the Abraham Accords and the Israel-India-USA-UAE (I2U2) agreements redefine cooperation across the Middle East, Azerbaijan’s deepening ties with the UAE and Israel reveal a quiet yet consequential expansion of this emerging geopolitical architecture, which could reshape regional politics. American energy companies can benefit from increased participation in the dealmaking that underpins these new collaborations if the pathway is opened.
From Bilateral Energy Deals to Regional Nexus
For decades, the South Caucasus was defined by stalemates, frozen regional conflicts, and great-power competition between the USSR/Russia and the West. Following the 2020 Nagorno-Karabakh war, Azerbaijan’s decisive 2023 victory and subsequent diplomatic shifts in the region, facilitated by peacemaking at the White House, have increasingly enabled the country to pursue diversified partnerships beyond its immediate neighborhood.
This shift was underscored last week when XRG, the international investment arm of Abu Dhabi National Oil Company (ADNOC), signed an agreement with Azerbaijan’s Southern Gas Corridor (SGC) during a visit by Azerbaijan’s President Ilham Aliyev to the UAE. This deal, involving the sale of a non-controlling stake in the SGC, directly engages the Emiratis in one of Europe’s most critical non-Russian gas supply routes. The agreement builds on a growing history of cooperation between ADNOC and Azerbaijan’s state energy firm, SOCAR, including earlier renewable energy initiatives with the UAE’s clean-energy leader, Masdar.
Traditionally, Azerbaijan’s foreign policy was anchored in its role as a major oil and gas exporter. Over the past decade, however, Baku has pursued strategic diversification, inviting deeper collaboration with Gulf partners, most notably the UAE, across both hydrocarbons and the clean energy sectors. In late 2023, ADNOC and SOCAR signed a strategic collaboration agreement focused on low-carbon energy technologies. This partnership complements ADNOC’s 30 percent stake in the Absheron gas and condensate field in the Azerbaijani sector of the Caspian Sea, alongside its shareholding in Masdar.
More broadly, the cooperation reflects a shift from resource extraction toward full engagement in the energy value chain. The Garadagh Solar Power Plant, developed jointly by Masdar and SOCAR, is now one of the region’s largest renewable installations. Additional agreements span solar, onshore and offshore wind, and green hydrogen development.
At the center of the Azerbaijan-UAE cooperation is the Southern Gas Corridor, a 3,500-kilometer pipeline system that delivers roughly 26 billion cubic meters of Caspian gas annually to Turkish and European markets, making it Europe’s primary non-Russian gas corridor. Azerbaijan is exporting about 12 bcm to Europe and is expanding its export target to 20 bcm by 2030.
That ambition was reinforced on February 4, when Azerbaijan’s First Deputy Minister of Economy, Elnur Aliyev, outlined the country’s development priorities at the OECD Eurasia Week 2026, emphasizing expanded international energy cooperation as a pillar of growth.
This partnership is not merely transactional. For both Azerbaijan and the UAE, energy cooperation functions as a geopolitical instrument, tying a strategically positioned Caucasus state to a core Gulf power in ways that reshape regional connectivity and influence.
Linking to Broader Peace Frameworks: the Abraham Accords and I2U2
Originally brokered by the United States during the first Trump Administration, the Abraham Accords marked a historic shift in Middle Eastern diplomacy by facilitating the normalization of relations between Israel and several Arab states, beginning with the UAE and Bahrain in 2020. These agreements opened the door to expanded trade, tourism, technology, and strategic cooperation across sectors that long lay outside the scope of formal Arab–Israeli engagement.
Building on this momentum, the I2U2 grouping, comprising India, Israel, the United States, and the UAE, was formalized in 2021 as a platform to coordinate joint initiatives in energy, food and water security, transportation, and technology. Unlike traditional security alliances, I2U2 is explicitly economic and infrastructure-focused, mobilizing private capital and expertise to deliver regional public goods and deepen cross-border integration within the broader West Asian economic ecosystem. At the same time, there are obvious geopolitical implications, including strengthening Israeli-UAE cooperation and deepening Indian involvement in the Middle East, even as China scored diplomatic points as a regional power broker in the Middle East.
Chinese demand for Arab oil concurrent to climbing American energy exports leaves many in Washington concerned that China will be able to leverage its hunger for hydrocarbons into influence in the Middle East. It is this trepidation towards China that compels the I2U2 into wider cooperation and integration with the economic and political architecture of the Middle East.
While Azerbaijan is not a formal member of I2U2, its growing strategic and economic ties with the UAE, combined with Abu Dhabi’s deepening relationship with Israel, are integrating Baku in this evolving architecture. This emerging broader economic network aligns with I2U2’s objectives, especially in energy security and renewables, and reflects a pragmatic shift toward economic statecraft as a basis for regional stability.
Azerbaijan’s long-standing relationship with Israel, rooted in energy exports and defense cooperation motivated by shared distrust of the Islamist theocracy in Iran, exemplifies this trend. Baku supplies a significant portion of Israel’s fuel needs and has expanded its footprint in Israeli energy markets, including a 10 percent stake in the Tamar offshore gas field and participation in joint exploration ventures in Israeli waters.
These developments dovetail with Emirati and Israeli investments across energy and infrastructure sectors and signal the emergence of a UAE–Azerbaijan–Israel triangle: an informal but strategically consequential nexus of cooperation that strengthens economic and security links between the Caucasus and the Middle East. U.S. companies could be better positioned to join American allies in the South Caucasus if not for a legislative relic that hinders their participation.
Section 907: An Outdated Framework in the New Geopolitics
While Azerbaijan’s ties deepen and move towards joining an increasingly complex regional network, some elements of U.S. policy toward Baku remain rooted in a bygone geopolitical era. Section 907 of the 1992 Freedom Support Act restricts U.S. government assistance to Azerbaijan. This is a provision born of Cold War-era conflicts and driven by Armenian-American lobbying in the aftermath of the Nagorno-Karabakh hostilities.
Today, however, many analysts and Azerbaijani officials argue that Section 907 has long outlived its strategic rationale and, if anything, is hindering deeper U.S.-Azerbaijan cooperation in energy and broader security contexts. Public statements from Baku highlight that the amendment’s original justification (a blockade of Armenia) no longer reflects current realities, which include resumed trade and cross-border cooperation between the two countries. Grain and other goods from third countries are arriving to Armenia through Azerbaijani territory is clear evidence that open regional trade is a new reality.
Repealing Section 907 could allow U.S.-based companies to engage more fully with pivotal energy partners, reinforcing U.S. influence in a region increasingly important to the European and global energy markets and a focus of geopolitical competition among the U.S., China, and Russia.
The UAE-Azerbaijan-Israel Triangle: A Strategic Confluence
The evolving relationship among Azerbaijan, the United Arab Emirates, and Israel goes beyond a set of parallel bilateral ties. It reflects an emerging triangle of cooperation with real strategic depth. The UAE’s normalization with Israel under the Abraham Accords and Azerbaijan’s longstanding ties with Israel set a new precedent for intra-regional engagement, one which benefits both Europe and the United States.
The trilateral relationship spans energy, infrastructure, defense, diplomatic engagement, and shared interests. Azerbaijan’s energy cooperation with the UAE is more than an economic partnership. It is a foundational building block of this broader architecture. Through joint projects in hydrocarbons, renewables, and infrastructure, Baku and Abu Dhabi are knitting tighter economic linkages that extend to Israel through existing energy, defense, and technology cooperation.
As Azerbaijan’s strategic ties with the UAE and Israel deepen, and as frameworks like the Abraham Accords and the I2U2 economic grouping continue to mature, policymakers, particularly in Washington, face a clear choice: modernize outdated policy relics such as Section 907 or risk limiting the ability to engage in a region where energy diplomacy and pragmatic cooperation are increasingly the currency of influence.
Wesley Alexander Hill
