The United Arab Emirates said Tuesday it is withdrawing its remaining forces from Yemen as tensions sharply escalated with Saudi Arabia over a sweeping offensive by Abu Dhabi-backed separatists, a move that further complicates the decade-long war and fragile peace efforts.

The UAE Defense Ministry said it was pulling out its remaining "counterterrorism teams” from Yemen, describing the move as voluntary, after Saudi Arabia and Yemen’s presidential council demanded Emirati forces leave within 24 hours.

The withdrawal follows a rare public dispute between Abu Dhabi and Riyadh, rival power brokers in Yemen, where fighting has intensified after forces linked to the UAE-backed Southern Transitional Council advanced across the resource-rich Hadramawt and Mahra provinces.

Before dawn Tuesday, the Saudi-led coalition fighting the Iran-backed Houthis struck a shipment at the port of Mukalla, saying it was carrying weapons for the separatists, a claim the UAE denied. AFP footage showed burned-out military vehicles at the port as workers sprayed them down.

The UAE said the shipment contained only vehicles intended for its own forces and rejected accusations that it was directing or pressuring Yemeni factions to carry out military operations, including near Saudi Arabia’s southern border.

Saudi Arabia’s Foreign Ministry described the UAE’s actions as "highly dangerous,” stressing that any threat to the kingdom’s national security is a red line. Yemen’s presidential council dissolved a defense pact with the UAE and declared a 90-day state of emergency.

The STC, a powerful southern separatist group and part of Yemen’s fractured government, rejected calls to withdraw from newly seized areas. A spokesman said the group would respond to any military movement against its forces.

Both the UAE and Saudi Arabia expressed a willingness to engage in dialogue.

"Diplomacy is still an option to stop any further escalation," a source close to the Saudi military coalition told AFP.

However, the STC remained defiant, insisting there was "no thinking about withdrawal" from its newly seized positions.

"It is unreasonable for the landowner to be asked to leave his own land. The situation requires staying and reinforcing," STC spokesman Anwar Al-Tamimi told AFP.

A Yemeni military official said on Friday that around 15,000 Saudi-backed fighters were massed near the Saudi border but had not been given orders to advance on separatist-held territory.