With heavy rains proving to be a tough challenge for both sets of players, the quarter-final seemed to be headed for extra time before Obaid sealed the fate of the game 12 minutes from time with a crisp finish aided by the woodwork.
The defeat ends the First Division club's hopes of reaching the showpiece final of a competition they have a rich history in.
Known as "The Kings" in domestic football for their record eight President's Cup triumphs, the last of which came 10 years ago, Sharjah gave Shabab a good fight despite the absence of key players Edinho and Ahmed Khamis through injury.
Salem Khamis, the 32-year-old Sharjah captain, tried to rally his young troops with an excellent individual performance, but to no avail.
He overshadowed the likes of Shabab's Brazilian forward Ciel, who failed to test the Sharjah goalkeeper with a couple of first-half efforts.
The Shabab goalkeeper Salem Abdullah breathed a sigh of relief in the 53rd minute when Hassan Mohammed's scorching volley skimmed the crossbar.
Mohammed Yousuf, the Sharjah goalkeeper, had a similarly tense moment in the 73rd minute but did well to keep out Ciel's header.
Five minutes later, though, Yousuf and the Sharjah defence could do little as Obaid latched on to Luiz Henrique's through ball with his finish going in off the bar.
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